T-Mobile's New Plan Includes A Creative Price Cut

Delving into T-Mobile US Inc TMUS's announcement concerning the next phase of its Uncarrier movement, Nomura said the new initiative is effectively a price cut.

Analyst Jeffrey Kvaal noted that starting January 22, all T-Mobile ONE plans will include taxes and fees in its currently advertised rates. The company said in Friday's announcement at the Consumer Electronics Show that the price customers pay is the one they see advertised, wiping away monthly wireless service fees an d even including all taxes.

To counter the effect of the cut on the average revenue per user numbers, the analyst noted that the company will shift new customers to T-Mobile ONE (which is ARPU accretive) by discontinuing its Simple Choice plans. Existing subscribers will have to opt in to the new pricing plans, delaying plan optimization, the analyst added.

Nomura also noted that the company released preliminary fourth-quarter subscriber statistics, consistent with its solid performance throughout the year relative to the consensus estimate.

Nomura has a Neutral rating and a $46 price target on the shares of the company.

Image Credit: By Mike Mozart [CC BY 2.0], via Wikimedia Commons