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T-Mobile US Plans to Ban Fees, Taxes on Unlimited Data Plans

Zacks Equity Research

According to a recent report by The Wall Street Journal, U.S. national wireless carrier T-Mobile US Inc. TMUS announced that it is planning to eradicate all additional fees and taxes on its unlimited data plans at a press event held in Las Vegas on Jan 5. The company further added that the plan will be put into action later this month.

Both new and existing customers signing up for the $70-a-month unlimited plan, called T-Mobile One, will now include multiple-line options as well. Moreover, T-Mobile US isn’t raising prices as part of this change and plans to cover additional fees. Hence, a family of four will enjoy savings of $20 per month, with their monthly bill dropping from $180.48 to $160.

T-Mobile US also launched a new program, KickBack, in which the company will pay back the unused data amount to their customers. Also, customers who use 2 gigabytes or less per month will be given $10 as credit on their next month’s bill.

The company has always been dynamic in luring customers from competitors by launching several low-priced service plans, promotional schemes and advertisements for individual consumers as well as small business entities. To this end, in the fourth quarter, T-Mobile US added 2.1 million net customers, taking the total customer count to 71.5 million at 2016-end. This marks the fifteenth consecutive quarter of more than one million net customer addition.

T-Mobile US also saw renewed strength in branded postpaid customers, with an addition of 1.2 million in the fourth quarter of 2016. Branded postpaid phone net customer addition totaled 933,000. This signifies the twelfth consecutive quarter of the highest branded postpaid phone net customer gain by the company.

Wireless Price Hikes and Bills

Wireless consumers pay millions and billions extra in the form of added surcharges, taxes, monthly fees and carrier price hikes every year. The practice seems to have reached its peak and carriers are still looking for new ways to fetch more from their customers. Several consumer groups have criticized extra fees because these are easily overlooked and lead to higher-than-advertised price payments.

As a reverse action to such moves, the decision by T-Mobile US to remove additional fees and taxes is an exceptional step. It seems that T-Mobile US is consumer-friendly and thinks about their benefits and facilities.

The main motive behind this eradication is to simplify bills, provide more transparency and lower customer call-center volume. Notably, around one third of the calls concern billing.

To Conclude

The innovative network expansion methodologies of T-Mobile US have helped in driving substantial consumer growth and competing against market behemoths such as Verizon Communications Inc. VZ and AT&T Inc. T in the enterprise market. Meanwhile,the telecom industry is rife with speculation that the Trump regime may pave the way for a merger between T-Mobile US and Sprint Corp S).

Also, shares of T-Mobile US have outperformed the Zacks categorized Wireless National industry on a year-to-date basis. The stock is up 43.07%, which is above the industry’s gain of 24.91%.

However, the company’s low-priced promotional and advertising service plans to lure customers from competitors failed to earn revenues to reward its shareholders.

We believe such mixed outcomes and moves are behind T-Mobile US’ current Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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