T-Mobile US international options to include no-fee data roaming

Reuters News
Posted: Oct 09, 2013 7:21 PM
T-Mobile US international options to include no-fee data roaming

By Sinead Carew

NEW YORK (Reuters) - T-Mobile US Inc on Wednesday said it will offer cheaper international options including texting and data downloads with no extra fees for customers who are traveling overseas as it hopes to gain customers from its rivals.

The offering, which also includes unlimited U.S. calls to overseas landlines for a $10 monthly fee, is the latest effort by the No. 4 US mobile operator to distinguish itself from bigger rivals and claw back years of customer losses.

T-Mobile US, which is also capping overseas voice-roaming charges at 20 cents per minute, said the new offers will be available for customers roaming in about 115 countries starting on Oct 31. It will be available for customers who sign up for its Simple Choice service plans starting at $50 per month.

"This is going to be solving one of the biggest pain points that people have," T-Mobile US Chief Executive John Legere told reporters ahead of the launch, referring to the extraordinarily expensive mobile phone bills that often shock consumers.

Legere said that operators generate billions of dollars a year at margins as high as 90 percent from roaming charges that can climb into thousands of dollars for just a short trip.

T-Mobile itself currently charges $10 to $15 per megabyte of data for overseas data roaming fees, according to Chief Marketing Officer Mike Sievert.

However, the company does not expect a decline in roaming revenue as a result of the elimination of data roaming fees, according to Legere, who said T-Mobile's revenue from traveling customers is far smaller than its rivals.

Legere said the company expects to make more money from voice calls because he sees the new international options encouraging customers to turn on their phones when they are traveling, instead of leaving them at home for fear of excessive fees.

As a result of the change, the executive also said he expects "to get a rather significant customer addition both on the consumer side and the business side."

T-Mobile US is typically known for serving consumers rather than business customers.

Although the company did not make changes to its agreements with roaming partners overseas, it estimated the service change would still be profitable for the company even if it resulted in 50 times more overseas network usage.

T-Mobile also announced on Wednesday that it had upgraded its network at home with high-speed wireless services in areas with coverage for just over 200 million people, roughly three months ahead of its year-end deadline for the milestone.

The announcement was the third big move in T-Mobile's strategy revamp. It announced the first step in March when it stopped offering service contracts and handset subsidies with a view to giving customers more flexibility. In July it followed up with smartphone installment payment plans that gave users the option to upgrade their smartphones more often.

Its three bigger rivals, AT&T Inc, Verizon Wireless and Sprint Corp, followed with their own versions of the installment plans.

Legere said the company would unveil more service changes in coming months as part of its so-called un-carrier strategy.

So far T-Mobile's new tactics appear to be reaping rewards as the company ended four years of subscriber net losses in the second quarter when it reported subscriber growth that blew past Wall Street expectations.

The company's shares have risen more than 54 percent since their New York Stock Exchange debut on May 1. T-Mobile US shares closed down almost 2 percent at $25.36 on Wednesday.

(Reporting by Sinead Carew; Editing by Ken Wills)