Can T-Mobile Win With the iPhone?
T-Mobile expects the iPhone to help it stem the flow of customers to rival carriers by the end of next year. The Deutsche Telekom subsidiary, which is set to merge with rival MetroPCS (NYSE:PCS), announced an agreement with Apple (NASDAQ:AAPL) on Thursday to start offering the iPhone officially.
What is T-Mobile Expecting to Achieve?
“It is an aggressive target but we think it is possible,” T-Mobile USA’s chief executive John Legere said on Friday about the end of the customer exodus. “A certain number of people wouldn’t come to our stores if we didn’t have the iPhone. And that’s not a matter that they would buy it, but there was an incredible number of churn. We worked very hard for a deal that made sense for us.”
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Legere said the availability of the iPhone would help the company provide a “dramatically different” experience for customers. However, according to CNET, that would involve the end of subsidies from the carrier. T-Mobile’s unsubsidized “Value Plans,” featuring cheaper rates for voice and data, will require customers to pay a larger amount upfront to receive a new phone.
What Could the End of Subsidies Mean?
An unsubsidized and unlocked iPhone starts at $649 at other carriers, but Legere said his company would lessen the burden on customers by offering a monthly finance plan to help pay off the device in installments. “When this device rolls out I can only tell you it will be a dramatically different experience, and I can only tell you that of all the reports that have been written about what’s going to happen when it comes out, they’re all wrong,” Legere said.
The chief executive added that financially, the company’s expectations for 2013 had already taken the impact of the Apple deal on the cash flow and earnings into account. The agreement also does not include volume commitments of the kind Sprint (NYSE:S) made to Apple, Legere said.