Guggenheim Underwhelmed By T-Mobile's New TV Service Plan

T-Mobile US Inc TMUS unveiled a part of its new strategy in the cable TV industry Wednesday, with the service scheduled to launch April 14 in eight markets.

The latest announcement — which comes in the wake of Viacom VIA's content agreement — is little differentiated from the many offers available in the market and comes with a “synthetically bundled” price that is much higher than what is charged by telcos and MSOs, according to Guggenheim Securities.

The Analyst

Mike McCormack maintains a Buy rating on T-Mobile.

The Thesis

While it’s probably too early to draw significant inferences into T-Mobile's longer-term ambitions, the recently announced cable plan is uncharacteristic for the "uncarrier" and most unexciting, McCormack said in a Wednesday note.

Consumers are going asset-light, which translates to significant CPE cost savings for PayTV providers, the analyst said. Against this backdrop, it’s surprising to see T-Mobile aiming to compete in the “thin-client” battle with its Layer3 TV division, he said.

Consumers already have extensive choices, and it may have been better for T-Mobile to focus on an app-only service, McCormack said. The offering is undifferentiated in a crowded market, the analyst said, adding that the synthetic bundle price point is unlikely to attract significant interest.

While the launch begins in eight markets, T-Mobile plans to offer its streaming service nationwide in the back half of 2019.