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Straight Talk Telecoms

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T-Mobile US has stolen the headlines yet again with its latest “Un-carrier” initiative, which it’s pitching as an “epic thanking” of its customers with free shares in T-Mobile, gifts every week, and free Wi-Fi access on domestic flights. T-Mobile’s 11th Un-carrier installment is significant because it is a fresh take on loyalty programs. It will force a response from competitors looking for ways to grab attention, reward customers, and gain market share.

T-Mobile continues to defy the odds by coming up with innovative Un-carrier initiatives even though the program has been running for more than three years. It certainly has a massive incentive to keep the Un-carrier ball rolling: Between March 2013, when it launched the strategy, and March 2016, T-Mobile US subscriptions nearly doubled from 34 million to 65 million. Meanwhile, the operator’s financial results have continued to improve, leading its NASDAQ stock price to more than double from near $20 in March 2013 to more than $40 in early June of this year.

That brings us to the most innovative part of Un-carrier 11, T-Mobile Stock Up, a program that will give a free share of T-Mobile US common stock to certain existing and new customers (a first for publicly traded companies, according to the operator). Specifically, the primary account holder on a postpaid consumer voice plan will qualify for a free T-Mobile US share. T-Mobile had 12.6 million branded postpaid accounts at the end of March 2016, so many of those will be eligible for a free share currently worth more than $40.

Another feature of Stock Up is that customers get an additional free share when they recommend T-Mobile to someone who then becomes a customer. Customers can claim up to 100 free shares per year – or $4,000 worth of shares at current rates.

Un-carrier 11 also includes the launch of “T-Mobile Tuesdays,” where customers are offered free gifts and potential prizes every Tuesday via the new T-Mobile Tuesdays app. On the first Tuesday of the program, June 7, T-Mobile offered every customer “a free dinner, dessert, and movie” worth more than $30. Specifically, every customer who downloaded the app and claimed their gifts could get a free Domino’s pizza, a free Wendy’s Frosty, and a ticket to the opening weekend of the movie Warcraft. According to T-Mobile US president and CEO John Legere, speaking at the Un-carrier 11 launch event in New York, “Other carriers want to screw you. We just want to take you to dinner and a movie and more.”

The third part of Un-carrier 11 is a free hour of Wi-Fi access for T-Mobile customers via their smartphones on all US domestic flights with Gogo Internet access. According to T-Mobile, this will be applicable to more than 4 million flights per year.

T-Mobile’s three Un-carrier 11 initiatives appear to offer more value with fewer strings attached than many other loyalty programs. The flipside is that they represent a significant investment for T-Mobile, but one that it says is already built into its financial guidance for 2016 as the company aims for lower churn, higher market share, and continued momentum.

What does this mean for other carriers worldwide? T-Mobile’s competitors will respond: In fac AT&T launched its “AT&T Thanks” program several days before T-Mobile launched Un-carrier 11. AT&T Thanks starts this summer with offers including “Ticket Twosdays,” whereby AT&T postpaid wireless customers receive a free movie ticket when they buy one at full price on Tuesdays.

For carriers outside the US, the question is can you or a competitor launch a similar program to gain customer loyalty and market share? You can bet that in some markets the answer will be yes.

Straight Talk is a weekly briefing from the desk of the Chief Research Officer. To receive this newsletter by email, please contact us.

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