As the days tick down to T-Mobile’s third quarter financial report, thanks in part to the bold action of their CEO, analysts are continuing to make bold predictions. According to an average estimate of seven analysts contacted by Reuters, T-Mobile is expected to report another 444,000 net additions when they release their third quarter financial results on November 5th. In fact, some analysts Reuters spoke with called those numbers conservative. By comparison, AT&T reported 363,000 net subscriber growth for the third quarter and when factoring in the numbers without tablets, AT&T would have seen a net subscriber loss. It’s become crystal clear that AT&T is the target of T-Mobile, a notion that is helped by the ease with which customers can move their phones over to T-Mobile’s network.
“T-Mobile is taking market share from everyone,” said Craig Moffett an analyst at MoffettNathanson but, he added that it is “specifically targeting AT&T at every turn.”
Consumers are being drawn to T-Mobile thanks to lower service prices, network enhancements and the introduction of the iPhone according to Joe Pasqualichio, an analyst at Eaton Vance. “They’re clearly having an impact,” he said. The real question for Pasqualichio is whether T-Mobile can chip away at AT&T’s family plan subscribers which account for 90 percent of the company’s subscriber base. “There’s a question of whether or not they can attract the family plans,” he said. “They tend to be more sticky customers.”
Deutsche Bank analyst Brett Feldman views it from another angle as he highlights the sharp drop in T-Mobile’s churn, or customer defections to a competitor. That number was down to 1.58 percent in the second quarter of 2013 against 2.1 percent one year ago. Feldman predicts T-Mobile’s churn will continue to stay low when the third quarter results are reported.
“T-Mobile has clearly done something right based on the fact that so many of their customers are choosing to stay with them relative to a year ago,” Feldman said.
T-Mobile’s competitors are looking to avoid a price war that could damage industry profits across the board, but without a stronger response Feldman predicts T-Mobile’s 2013 target for 1 million to 1.2 million net additions may in fact be too low.
“I think this is going to be the second consecutive quarter where T-Mobile are the phone net-add champion,” Feldman said.