Last week T-Mobile dinged AT&T for not unlocking its subscribers’ phones for 60 days after they have been paid off. But what T-Mobile didn’t say was that it has a very similar policy, itself.
A spokesperson for T-Mobile told Fierce, “T-Mobile automatically unlocks customer devices that are paid off after 40 days.”
Both AT&T and Verizon spokespeople tried to spin their device payment plans and unlock policies in the best light.
AT&T said its “36-month installment plans give customers a lower monthly payment versus paying for the cost of a device over 24 months, which T-Mobile’s new plan requires.”
And T-Mobile said, “Even after an AT&T customer checks off all their unlock requirements, they still keep it locked unless you request to have it unlocked.”
But it appears the industry-best unlock policy belongs to Verizon, which automatically unlocks all its subscribers’ phones 60 days after activation, regardless of if they are paid off or not.
Analysis on pricing
After T-Mobile’s event last week where it announced its new Go5G plans, analysts had some comments. They note that T-Mobile and its competitors are walking a tight-rope between offering device deals for subscribers and keeping their free-cash flow robust for shareholders.
Analyst Vijay Jayant with Evercore ISI wrote, “The new Go5G and Go5G Plus plans offer incremental benefits versus the existing Magenta/Magenta Max offerings, in our view, and carry a price that is $3-$5 per line higher than the comparable Magenta series plan.”
Other than the higher prices, Jayant says the Go5G plans look a lot like the Magenta Plans. “At the core, we see these plans as, on balance, cash-flow accretive, as we don’t believe that the incremental benefits that consumers receive will cost T-Mobile enough to offset the higher price point.”
While Evercore seemed to think that the new Go5G plans would improve T-Mobile’s cash-flow, the analysts at New Street Research had a different perspective.
A New Street note written by Jonathan Chaplin focused on T-Mobile’s news that it would offer both new and existing subscribers the opportunity to upgrade their devices every two years.
Chaplin wrote, “It will cost them though.”
In fact, AT&T has claimed good success in reducing churn and keeping its customers happy with its aggressive device promotions. But last week, after AT&T reported its first quarter 2023 earnings, the company’s stock took a tumble.
Wall Street was not happy with its free cash flow of $1 billion during the quarter. And some of that related to AT&T’s costs to subsidize new wireless devices.
“We were somewhat surprised at the magnitude of the decline in AT&T’s stock following the announcement of 1Q23 results on Thursday,” wrote Jayant. But he added, “Free cash flow, at $1 billion, was still well below our below-consensus forecast. Given the company’s track record of lowering FCF guidance, we can understand why investors might react with ‘here we go again.’”
He said the biggest contributor to the low free cash flow was a drag from accounts payable associated with handsets purchased in the fourth quarter 2022, which had not yet been paid for.