T-Mobile CFO: We're not in an all-out price war

The executive applauds Sprint's comeback efforts, but says its customers are mostly coming from AT&T and Verizon Wireless.

Roger Cheng Former Executive Editor / Head of News
Roger Cheng (he/him/his) was the executive editor in charge of CNET News, managing everything from daily breaking news to in-depth investigative packages. Prior to this, he was on the telecommunications beat and wrote for Dow Jones Newswires and The Wall Street Journal for nearly a decade and got his start writing and laying out pages at a local paper in Southern California. He's a devoted Trojan alum and thinks sleep is the perfect -- if unattainable -- hobby for a parent.
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Roger Cheng
3 min read

Contrary to popular belief, T-Mobile isn't looking to drag down pricing in the wireless business.

T-Mobile's strategy has customers flocking to its service. The CFO says it's not all about price. James Martin/CNET

That's according to T-Mobile Chief Financial Officer Braxton Carter, who made his case for growth and the company's financial well-being at an investor conference on Thursday.

"I don't think it's an all-out price war," Carter said. "There have been a lot of moves, but they're targeted."

T-Mobile has been the beneficiary of aggressive moves over the past year and a half, with its Uncarrier campaign and CEO John Legere's brash attitude winning over consumers and driving its turnaround. But the competition isn't sitting back. Sprint, the nation's third-largest wireless carrier, has been revitalized under new CEO Marcelo Claure, and AT&T and Verizon Wireless, the nation's two largest carriers, fired back with their own promotions, underscoring the heightened competitive environment.

It's that environment that leads some to wonder whether the industry is engaged in a price war -- a boon to consumers but worrisome to investors.

Carter downplayed the concerns. The promotion T-Mobile ran that gave a family of four 10 gigabytes of data for $100 (and device fees) was pulled in October, and the extra data will expire at the beginning of 2016. He said the elimination of that promotion hasn't slowed the momentum.

The last few Uncarrier moves -- which included Wi-Fi calling, data-free music and a free trial period -- haven't been about pricing.

Rivals offers such as AT&T and Verizon's offer for double the normal amount of data -- and Sprint's offer to double those plans -- have targeted specific high-end data plans and are limited time promotions, he noted.

Sprint's Claure spoke at the same investor conference yesterday, and teased even more promotions and a campaign that would make it clear that his company offers the best value in the industry.

When asked about Sprint, Carter said he was happy to see his competitor showing signs of life. But he warned that Sprint still faces problems with its network, which will take time to work through.

"That's going to be the challenge for them," he said.

The difference in customer growth is clear. In the last quarter, Sprint added 590,000 customers, but only because of its weaker wholesale business -- it lost 272,000 net Sprint branded customers. T-Mobile added 2.3 million customers in the same period -- including 1.4 million customers who paid at the end of the month, higher credit consumers known as post-paid.

Carter believes there is room for both companies to grow. He noted that a vast majority of T-Mobile's customers come from AT&T and Verizon Wireless. Of the Verizon customers that T-Mobile are taking, 93 percent were higher quality contract subscribers, he said, dispelling the notion that Verizon was only losing its lower end or prepaid customers.

The frenzy of switching has only increased in the fourth quarter, spurred by the debut of Apple's iPhone 6 and iPhone 6 Plus, he said. The iPhone creates a natural switching tendency as customers review their options before signing a new contract and upgrading their device.

"It's a perfect time for consumers to re-evaluate the landscape," he said, noting that T-Mobile has won more than its fair share of switchers.