T-Mobile vs Verizon price wars are over, and carrier profits shoot up

T-Mobile vs Verizon price wars are over, and carrier profits shoot up
T-Mobile used to be in a price war with all them big bad US carriers, but now it's gotten its prices on par with its Verizon nemesis, yet it remains everyone's popular underdog. We recently compared the new unlimited plans of the big four, and there is indeed very little difference in pricing now. Save for Sprint, which, however, also raised prices this year, even though it has some catching up to do when it comes to coverage outside of large cities.

In fact, Wall Street research firm Oppenheimer declared carrier price wars ever which bodes ill not only for iPhone and Galaxies' subsidies but also for plan prices. Instead of slashing individual or family plan tags, US carriers are introducing new, more expensive plan tiers with more features and extra options. This is a classic sign of price war endings, argues the analysts' shop, and new iPhone subsidies are also much tamer than previous years.

The iPhone XS and XS Max can be had for "buy one get the second for $700 off" at Verizon or AT&T, but this is actually a humble promo and in line with what carriers were offering way back in 2016, while last year the subsidies were more aggressive.

T-Mobile endured low average revenue per user, and pale profit margins for years until it gobbled up market share from the other carriers, and is now turning its attention to profitability. Verizon laughs all the way to the bank, with 68% earnings margin before taxes and depreciation, followed by Sprint and AT&T, with T-Mobile coming last but probably not for long. Someone had to pay the price for its breakneck expansion, after all.

Buoyed by all the noise around Sprint's merger with T-Mobile, one could easily lose sight of the big picture, namely that the two largest US carriers still hold the lion's share of industry profits. Even if T-Mobile ties the knot with Sprint in the end, the combined carrier will still be smaller than Verizon or AT&T in terms of subscribers and revenue. This could all change with the move to 5G, says Oppenheimer's research:


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4 Comments

1. CreeDiddy

Posts: 2148; Member since: Nov 04, 2011

The LTE and WIFI need to be addressed immediately. There are serious drops and weak signal strength. I am almost ready to return my XS Max back in for possibly an 8 Plus or wait for the XR.

2. D34ever

Posts: 225; Member since: Jul 14, 2018

Consumers should get ready to be shafted after the TMO/Sprint merger. TMO stopped being an Un-Carrier a year ago. They are behaving more and more like VZ and AT&T.

3. XDAdam

Posts: 276; Member since: Feb 03, 2016

It was only a matter of time. You can't be a huge success if you don't make any money.

4. Rigmaster

Posts: 234; Member since: Jan 22, 2018

Always find stories like this interesting because the conflict with EVERY person I know that has VZW service and is complaining that they're always on the lookout because T-Mo is still cheaper after the price hikes. If the US market ends up being a big 2.5, it won't be a surprise so much as an evolution. Just like the service has been across the board.

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