The Smallest & Liveliest Of The DeadBeat Carriers Successfully Launched Wireless WMDs
Bloomberg reports: T-Mobile Sales Beat Analysts’ Estimates as Subscribers Surge. So, how did BoomBustBloggers know this would occur? Well, It started last year with the article "Deadbeat Carrier Creative Destruction In The Ongoing Mobile Computing Wars". You see, US wireless carriers are running one of the biggest Ponzi schemes around. The buy overpriced hardware from manufacturers on contract (see Have We Reached "Peak Premium Smartphone"?) mark up said hardware and then offer it at heavily and usurious financing rate otherwise called a subsidy. The US consumer buys these overpriced devices for a relatively small downpayment and then proceeds to pay through the nose to the carrier a very, very margin rich wireless fee for what amounts to a commodity service of dumb virtual pipes through the airwaves. Not only does the carrier recoup its outlay for the device purchased en masse from the OEM, the carrier also tacks on and collects a very large premium for its post paid wireless services as well.
There are 4 major national carriers in the US, basically two big ones two smaller ones. The smallest of the 4, T-Mobile, consistently go beat up - losing out on the right to subsidize the iPhone at a loss (like AT&T used to and Sprint still does) and basically losing subscribers. Then they decided to do something about it. They said, "Hey, let's stop being deadbeats!". By changing their pricing plans and eliminating subsidies and instead selling pure access to their virtual pipes (like a carrier is supposed to) combined with actual "real" financing of the hardware (at competitive rates, nonetheless) they essentially committed DeadBeat Carrier Blashphemy. The only issue was, it worked, to the chagrin of the competition - reference:
- Deadbeat Carriers Compete, aka #MarginCompression!!!
- The Death Of The Deadbeat Carriers, Part 2 - Apple Avoideth, Google Destroyeth
- Death Of The Deadbeat Carrier, part 3 - Home Internet Access Unplugged!
Now, back to the Bloomberg article whose substance we predicted this time last year: T-Mobile Sales Beat Analysts’ Estimates as Subscribers Surge
T-Mobile US Inc. (TMUS), the fourth-largest U.S. wireless carrier, reported third-quarter sales that exceeded analysts’ estimates as its cheaper service plans and phone-upgrade strategy attracted customers.
Sales rose to $6.69 billion, an increase of 8.7 percent when adjusted to account for T-Mobile’s merger with MetroPCS Communications Inc., according to a statement today from the Bellevue, Washington-based company. Analysts projected $6.58 billion, the average of estimates compiled by Bloomberg.
T-Mobile, which combined with MetroPCS in May, added 648,000 new monthly subscribers, topping the 401,000 average estimate and gaining for a second straight quarter.
T-Mobile, which merged with MetroPCS six months ago, added 648,000 new monthly subscribers, topping the 401,000 average estimate and gaining for a second straight quarter. T-Mobile has benefited from offers such as zero-down financing on phones and a $10-a-month service that lets customers upgrade their devices more often -- a program that rivals such as Verizon Wireless, AT&T Inc. (T)and Sprint Corp. (S) have now adopted.
Umm... Margin Compression!!!??? Remember we called this in the telecomm space a few months ago... Deadbeat Carriers Compete, aka #MarginCompression!!!
The net loss was $36 million, following a second-quarter net loss of $16 million. The average phone bill for monthly subscribers shrank about 3 percent to $52.20 from the second quarter as more customers opted for cheaper plans. Analysts had projected $52.86, according to a survey of seven estimates by Bloomberg.
... T-Mobile rose 1.7 percent to $28.83 at 9:42 a.m. in New York. As of yesterday, the shares had climbed 72 percent since May 1, following the MetroPCS merger. Deutsche Telekom rose 0.6 percent to 11.82 euros in Frankfurt.
Who in the hell is behind this rampany wave of #MarginCompression? Oh yeah! Google Has Officially Gone On Record To Confirm Reggie Middleton's "Negative Margin Business Model" Tactics. Google has created an atmosphere and environment that is primed to drive down the cost of computing and Internet access even further. I will discuss that in detail in my next article on this topic. In the meantime and in between time, read:
- Have We Reached "Peak Premium Smartphone"?
- Expect Signs Of Peak Smartphone From The Market Leaders Samsung And Apple As Competition Increases
- Here I go again – Hardware is Dead & Samsung Agrees
- Samsung Follows Footsteps Of Apple, HTC, Nokia - Wasn't That Quick?
Subscribers, this is directly relevant to both the Apple and the Google valuations.
Recent Apple Valuation Reports
Subscribers, download the Q3 and Q4 2013 valuation reports (click here to subscribe).
- Apple 3Q2013 Valuation Update - Retail
- Apple 3Q2013 Valuation Update - Pro & Institutional
The update from two months ago is also of value for those who haven't read it. It turns out that it was quite prescienct!
Recent Google Valuation Reports
- Google Q1 2013 Valuation Note - Retail
- Google Q1 2013 Valuation Note - Professional & Institutional