Six years ago, T-Mobile US was crashing and burning. It was the worst performer in all of wireless. In order to survive, they needed the right kind of new leadership with big ideas. So, they hired John Legere as CEO. He studied the wireless marketplace and laid his growth plans. Then they started to grow, and thanks to Legere, today they are stronger than ever. Today they are approaching the next, important step in their journey.
T-Mobile US is now reaching a critical moment to keep growth on track. So, what’s next chapter in their growth story? First, it’s important to pull the camera back and take a long-term, historic view of the transforming wireless industry and the direction the different competitors are heading. Growth in traditional wireless is slowing since everyone who want’s wireless is already wireless.
Pull camera back: Where will wireless growth come from?
So, growth must come from other areas. This is where we see every wireless carrier moving in different directions.
Verizon acquired AOL and Yahoo and started Oath, which is their e-commerce direction. Think of this like an Amazon.com type direction.
AT&T acquired DirecTV, created DirecTV NOW and the wireless TV or mobile TV direction letting customers watch television on their smartphone or tablet anywhere in the United States over the AT&T Mobility network.
Sprint has not yet embarked in a new direction for growth.
T-Mobile US understands they need to continue to show growth. So, if growth in new additions are slowing, they have begun to move in the direction of pay TV. They intend to offer a pay TV signal to the home and over their wireless network. Their customers can watch TV over their television or wireless device. They can watch at home over the wireline Internet service, or while out on the mobile network.
So, it looks like the new strategy for T-Mobile US seems to be following AT&T. This sounds like a good plan and if they offer a good quality service, with true innovation and at an affordable price, this could be helpful to them with regards to growth.
T-Mobile US faces threat from pay TV and cable TV wireless expansion
However, the competitive threat is expanding. Wireless moving into the world of pay TV sounds like a winner, but there is one caveat. Pay TV competitors are also moving into the wireless space.
Comcast started offering their Xfinity Mobile wireless service last May. While they are not competing the same way Verizon Wireless, AT&T Mobility, T-Mobile and Sprint are, they are still important in the wireless mix simply because every wireless customer typically only does business with one company.
Comcast, Charter and Altice see wireless as a way to stabilize their customer base during this transformation in the industry. Looking at Comcast success with Xfinity Mobile, I would say it is working, so far. However, this limited competitive strategy will keep them from becoming fierce competitors.
Even though Comcast, Charter and Altice will not be a threat in the same way other wireless carriers are to each other, I still fully expect T-Mobile CEO John Legere to swear and attack them the same way he focused on Verizon, AT&T and Sprint in recent years. For better or worse, Legere takes no prisoners.
The next shift in the wireless growth wave
What this means is the entire wireless industry is now shifting and expanding, once again. Similar to the way it shifted and expanded a decade ago when the first iPhone and Android hit the market. Similar to the way wireless data and apps have exploded over the last decade.
As growth slows in traditional wireless since everyone who wants wireless has wireless, companies need to find new ways to grow in order to keep their shareholders happy.
We are seeing different strategies from different wireless carriers and pay TV providers. Different moves going forward, and different focuses as well. With all that said, I expect there to be quite a bit of confusion along with incredible innovative leaps.
Competition and innovation intensifies between wireless and pay TV
Looking backwards a decade, we can see how the iPhone and Android devices were an important turning point. After that, we saw wave after wave of growth. Each move from one wave to the next will always be a potential stumbling block.
Some companies will do better than others. Some companies will continue down the path they chose, while others will have to make changes to their strategy going forward if they don’t see growth. The pressure is on.
Even with great performance in the past, there are no guarantees going forward.
What is the T-Mobile US plan for growth going forward?
So, with that said, what about T-Mobile US? They have said they are moving into pay TV, both wireless and wire line. They acquired a small company to help them do just that. The path sounds interesting. Now we just have to wait and see if they are successful or not.
Will they create the next growth wave, or will they stumble? Remember, the reason they are moving into pay TV is to show growth in order to keep their investors or their owners happy. If they can, they will be able to hang onto investors. If they cannot, investors will leave, and the stock price will likely decline.
That’s the bottom line with any public company. So, that’s their primary goal.