Telecom & Wireless

Why T-Mobile Can't Win

T-Mobile US Inc. (NYSE: TMUS) has lost its suitors, one by one, and almost certainly has to stand on its own as the nation’s fourth largest wireless provider. Consumer ratings of its services, and its size in comparison to its rivals, cannot offset its aggressive marketing tactics that are meant as a means to add customers.

T-Mobile ranks poorly in major customers service ratings. In the J.D. Power ranking of wireless network quality, it falls at the bottom of the ratings of the four providers in most regions of the country, or in some cases third. Verizon Communication Inc. (NYSE: VZ) dominated the rankings in all regions. T-Mobile’s service is also below average in the American Customer Satisfaction Index. However, the same is true of AT&T Inc. (NYSE: T) and Sprint Corp. (NYSE: S). In the RootMetrics mobile networks performance measurement, T-Mobile finished third among the four carriers in most measurements and fourth in two of them. In the Consumer Reports annual cellphone service ratings, T-Mobile ranks behind leader Verizon and ahead of loser Sprint. However, T-Mobile’s rank is hardly strong:

Verizon Wireless was once again the top major carrier, receiving high marks for data service and some aspects of customer support. AT&T and T-Mobile got mostly ho-hum marks, though AT&T was the lone carrier to receive the top rating for the reliability of its 4G service.

T-Mobile’s financial situation is also relatively weak. The company made only $391 million on revenue of $7.2 billion in the second quarter of this year. As a contrast, AT&T’s wireless business made $4.7 billion in segment operating income on $17.3 billion.

As for subscriber count, at the end of the second quarter Verizon had 123 million, AT&T 116 million, Sprint 54 million and T-Mobile 51 million. While T-Mobile may pass Sprint soon, Sprint’s financial figures show that third place does not guarantee strong bottom line results.

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One other measure of T-Mobile is the stock market. Its shares are down nearly 20% so far this year. AT&T and Verizon shares are off very slightly, and Sprint’s are down 45%.

T-Mobile’s management claims, and to an extent its earnings show, that its current performance is fine. A great deal of data show that its future probably is not.

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