Bloomberg News

T-Mobile Enlists Shakira to Promote Global Roaming Plan (2)

October 10, 2013

T-Mobile US Inc. (TMUS:US) was first to let customers buy smartphones on an installment plan, then offered a widely copied upgrade program called Jump. Now it aims to shake up the industry a third time with an unlimited international data service that’s backed by pop singer Shakira.

The package, called Simple Global, is a free feature to subscribers on its main plan that gives Internet access and ability to send texts in more than 100 countries at no additional cost, the company said in a statement yesterday. The U.S. wireless carrier unveiled the plan at an event in New York featuring a concert performance by Shakira, who is partnering with the company under the title of “T-Mobile collaborator.”

The global roaming service is the latest effort by the Bellevue, Washington-based company to challenge the wireless industry business and brand itself as the “un-carrier.” T-Mobile broke from the widely used long-term contract model in March when it introduced an installment purchase plan for smartphones as an alternative to subsidizing devices in return for customer loyalty.

“Today’s phones are designed to work around the world, but we’re forced to pay insanely inflated international connectivity fees to actually use them,” Chief Executive Officer John Legere said in the statement.

T-Mobile’s stock rose 2.4 percent to $25.97 at the close in New York. The shares have gained 31 percent this year.

The carrier’s pay plan and early-upgrade programs have been replicated by rivals including AT&T Inc. (T:US) and Verizon Wireless. Under the new plan, which takes effect Oct. 31, international calls will cost 20 cents a minute.

Unconventional Approach

As the smallest of the top four carriers, T-Mobile has used unconventional sales approaches and cheaper service plans to attack Verizon Wireless and AT&T, which together control two-thirds of the U.S. market. Legere, known for his pink T-shirts and profanity-laced public performances, flared tensions with AT&T at the Consumer Electronics Show in January when he called the carrier’s network “crap.”

‘I don’t care if the others copy us,’’ Legere said in an interview yesterday, regarding the new data plan. “If AT&T and Verizon tried this it would be a negative hit to their profitability.”

T-Mobile’s “un-carrier” campaign, together with an interest-free phone financing plan and the addition of Apple Inc.’s iPhone in April, helped the carrier end a three-year customer losing streak this year. In the second quarter ended in June, T-Mobile added 678,000 monthly subscribers, surpassing the 551,000 for Dallas-based AT&T.

‘Meaningfully Cheaper’

Last year, T-Mobile lost 2.1 million subscribers, and Legere originally predicted in January that it would take until 2014 to end the defections.

“T-Mobile is meaningfully cheaper than its competitors, and they have found a compelling way to communicate that advantage,” Craig Moffett, an analyst with MoffettNathanson LLC, wrote in a note last week.

The carrier, which is controlled by Deutsche Telekom AG (DTE), also said yesterday that its network upgrade to a more speedy service using long-term evolution technology has been extended to cover more than 200 million people in 233 cities and towns.

Verizon Wireless, which was the first carrier to start LTE service in 2010, has coverage in more than 500 markets. AT&T operates LTE networks in 437 cities and towns, it said in an e-mail. Sprint Corp. (S:US), the third-biggest carrier, has been playing catchup on LTE and has the service in 187 markets.

T-Mobile also introduced a discounted service for users in the U.S. making calls and sending text messages to the countries covered in its Simple Global plan. Customers pay a maximum of 20 cents a minute to make calls and the service is available for $10 a month, the carrier said.

Sharing Music

Music star and Grammy winner Shakira will help with T-Mobile’s marketing campaign under a multi-year partnership agreement, the company said.

“Today is all about bringing the world closer together,” Shakira said in the statement. “I’m excited to partner with T-Mobile and look forward to being able to share my music in new and innovative ways.”

Enlisting Shakira mirrors the strategy of BlackBerry Ltd., which hired singer Alicia Keys as its global creative director, a new title. The move failed to stoke demand for BlackBerry’s new lineup of phones, prompting the company to write down its unsold inventory by almost $1 billion last quarter.

As part of the agreement, T-Mobile said it will support Shakira’s future music releases and host special “fan engagement activities.”

To contact the reporter on this story: Scott Moritz in New York at smoritz6@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net


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Companies Mentioned

  • TMUS
    (T-Mobile US Inc)
    • $26.67 USD
    • 0.07
    • 0.26%
  • T
    (AT&T Inc)
    • $33.96 USD
    • -0.07
    • -0.21%
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