T-Mobile US Inc (TMUS)’s Uncarrier Business Might Turn to Be Unprofitable


T-Mobile US Inc (NYSE:TMUS) unveiled a plan to do free calling and texting through Wi-Fi to all  its customers. T-Mobile’s CEO, John Legere, made this announcement on Wednesday in the company’s Uncarrier 7.0 event. CNBC’s Jon Fortt reported about this announcement and the Fast Money crew discussed on the implications of this announcement in CNBC.

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Fortt said that this announcement has raised some fears in other companies that their subscribers might switch to T-Mobile US Inc (NYSE:TMUS). He mentioned that the announcement from T-Mobile CEO comprises of two major things. Firstly, the provision to make free texting and calling through the Wi-Fi to the T-Mobile number. Any Wi-Fi network can be utilized to make use of this facility on the T-Mobile number. Facilities to upgrade the phones of existing customer with required Wi-Fi facility to avail this free calling texting options is the second part of the announcement.

“[…] What do you think was the biggest growth month every in the history of T-Mobile. You may think it was when we launched the iPhone, you may think it was the contract freedom. […] Guess what it was. August. We added 10% more customers […] in the month of August that any other month in the history of the company. And it’s because of these Uncarrier moves. It’s because of the brand and I think this proposition of being the Uncarrier and changing the industry, it’s really working,” Legere said.

Fortt mentioned that this might be very good news for consumers. He added that there is still some uncertainty in pricing due to increase in competition in the market.

Fast Money traders Dan Nathan and Pete Najarian talked about the announcement and its implications. Nathan was not very optimistic about this announcement and he thinks that this may not end up well for the organization, though it is beneficial for the consumers.

“When I hear Uncarrier, I think unprofitable. […] this is great for consumers, it’s going to be bad for some of these guys who are trying to consolidate. There’s too many competitors. The pricing is going to zero eventually […],” Nathan said.

Najarian thinks that this move my CEO of T-Mobile US Inc (NYSE:TMUS) forces the merger and acquisition activity in the space, and have a little impact on pumping up the stock value.

One of T-Mobile US Inc (NYSE:TMUS)’s shareholders is Paulson & Co., led by John Paulson. As of 30 June, 2014, they hold around 13 million company shares.

Disclosure: None

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