T-Mobile is destroying itself as insiders dump the stock and customers get ready to leave
T-Mobile’s days as the Un-carrier are over as ridiculous changes are ruining the wireless provider's image.
T-Mobile insiders dump the stock at the rght time, will its customers be next? | Image by PhoneArena
PhoneArena was the first to report the rumor that T-Mobile was about to announce a big change to its device promotion policies. The next day, the carrier made the big announcement reducing the number of times a promotion could be used by a single account from four to two. For example, a promotion that in the past allowed you to make a trade-in to score a free iPhone for all four members of a family account will now be limited to scoring two free iPhone units.
T-Mobile is no longer the Un-carrier
By making this change, families of four will no longer be able to follow the rules of a device promotion to score everyone in the family a new handset. With the new limit of two promotional devices allowed per account, this is bound to put a dent in T-Mobile's ability to generate new subscribers switching over from other carriers. In addition, most free and discounted lines are now ineligible to take advantage of device promotions unless a free line is part of a "Yearly Upgrade" plan or a "Third Line Free" introductory offer.
The Un-carrier days when then CEO John Legere ran T-Mobile. | Image by T-Mobile
T-Mobile investors dumped the stock once the carrier officially announced the revised device promotion policy. On Thursday, the stock dropped to an intra-day low of $198.69 before recovering to close the regular trading session at $201.40. Today, the markets were closed to observe Good Friday. It is interesting that the selloff in the shares of T-Mobile came about two weeks after we pointed out that based on data submitted to the Securities and Exchange Commission (SEC), T-Mobile insiders have been selling their shares.
The carrier's insiders have been dumping their shares
To be fair, some of this selling could be related to estate or tax planning. During March, T-Mobile Director Srikant Datar, who is Dean of the Harvard Business School, generated gross proceeds of $945,890 after selling 4,291 shares of the carrier. Over a 90-day period that ended in the middle of March, insiders required by the SEC to file when they sell their T-Mobile stock got rid of 694,134 shares of T-Mobile valued at approximately $150.8 million.
Is T-Mobile destroying itself?
These insiders included current Vice Chairman, board member, and former CEO Mike Sievert, who sold 80,000 shares valued at $17.2 million. Former Sprint CEO and current T-Mobile director Raul Marcelo Claure sold 550,000 shares for gross proceeds of $119.6 million. Since February, sales of T-Mobile shares by those considered to be insiders by the SEC swamped insider purchases by a tally of 11-0.
For someone like this writer, who started writing for PhoneArena in 2009 when T-Mobile was dead last among the four major carriers, and who had the pleasure of writing about the amazing turnaround led by CEO John Legere, seeing the carrier self-destruct seems rather odd. Once the self-proclaimed Un-Carrier whose goal was to erase customer pain points, T-Mobile seems to be making some incredibly risky moves.
Something is not adding up
The one metric that Wall Street watches above all others to determine the current status of a carrier each quarter is its postpaid phone net adds. In February, the carrier said that it will no longer report this figure since it believes that net account adds is a more accurate metric for the company thanks to multi-line accounts that own smartwatches, tablets, and other connected devices.
We can let this slide. What we can't just forget is the carrier's decision to transition into a digital Mobile Network Operator (MNO). Stores will be closed, reps let go, and most transactions will be handled via the T-Life app, even monthly invoice payments and phone upgrades. Yes, T-Mobile will report higher profits without having its revenue used to pay rent for stores, and commissions to salesmen. The higher profits should hike the stock in theory, yet insiders have been dumping their shares. Something is not adding up and that should be concerning to T-Mobile customers.
It isn't as though the company's business has started slumping on its own, forcing it to make changes. Any deterioration in the wireless provider's operations will come from its shift to a digital carrier, which is something that most customers are not happy about.
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