– A market differentiator

OMAR SHARIF

The problem; and the solution ... Differentiation strategy + maintaining a high perception of value.

Up until late 2012, T-Mobile was solely focused in reducing prices.It was the cost leader among the major 4 carriers.

Instead of gaining customers, T-Mobile was losing them.

Revenues were slipping. Investors were unhappy.

Major competitors barely took T-Mobile seriously.

With the hire of new CEO in September 2012, a wave of welcome changes started coming.

John Legere is credited for un-carrier strategies, which is basically to dismantle all the money-making fees the wireless industry has baked into cell phone plans over the years.

T-Mobile also started to heavily invest in its infrastructure, i.e. leasing more towers, acquiring more spectrum, eliminating dead spots etc. A failed AT&T merger got T-Mobile some greatly needed spectrum and handful of cash.

Since 2013, their primary strategy shifted from cost leadership > differentiation. T-Mobile currently maintains their low prices, but is more focused in creating value and setting themselves apart from major competition. Best part is, it is working!

T-Mobile’s turning point, strategic placement of a new leaderCEO ‘John J. Legere’ got hired in September 2012 – often described as brash, eccentric & outspoken.

What is T-Mobile’s Strategy ? Is it working?

Key performance metrics in the wireless industry And how well the players are doing.

Shows that T-Mobile has managed to resuscitateitself from a flat line starting from Q1 2013.

John Legere got hired just a few short months ago.

Key performance metrics in the wireless industry And how well the players are doing, continued .

Shows that T-Mobile has some of the largest gainssince Q4 2012.

What’s up with Sprint?

Key performance metrics in the wireless industry And how well the players are doing, continued ..

Shows that T-Mobile has managed to reduce itschurn rate very well.

Churn Rate: The rate at which subscribers leave aCompany. Higher=Worse, Lower=Better.

Key performance metrics in the wireless industry And how well the players are doing, continued ...

Shows that T-Mobile has stabilized its ARPU despite constantly giving more perks to its customers.

Verizon is getting richer, but AT&T and Sprint is hurting.

ARPU: Average Revenue Per User

Key performance metrics in the wireless industry Stock performance shows 2 Year Growth/Decline for the 4 major carriers.

2 Year Growth/Decline

Accessed Feb 22, 2015 10:20 am

Key performance metrics in the wireless industry We believe customer service is also an important performance metric in this industry.

Within a year, T-Mobile has improved from last to the first position is customer service performance.

J.D. Power is a very respected company conducting surveys of customer satisfaction within many industries.

Understanding spectrum – what is it?Why is it important?

Spectrum is a limited resource.

It is very expensive & available through rareFCC auctions, occurring once every few years.

As more users rely on data heavy applications, spectrum is getting increasingly crowded.

Every carrier wants more spectrum, however only limitedquantity is available.

Spectrum cannot be created, once allocated, the allottees hold the rights to use them indefinitely.

Medium/High Spectrum = More download speed.Low Spectrum = More reach, more penetration.

Sprint will become the most valuable wireless company due to the spectrum assets it acquired from buying Clear Wire.

Resources, capabilities & constraints.

Resources

• One man, ‘John Leger

e’• E

nough Said.

Capability

• He has managed to keep the wireless industry highly competitive and made every other industry leader follow his footsteps.

• He has been able to turn a large company around swiftly & effectively by utilizing the power of differentiation.

• T-Mobile has successfully reduced its churn rate, which adversely affects its revenue and subsequently profits.

Constr

aints

• Limited spectrum assets, its T-Mobile’s Achilles heels.

• Constrained resources to buy more spectrum for growth.

• When customer base increases, load on data will as well. Without further spectrum, it might bottleneck performance.

• Parent company is not interested in investing more money for T-Mobile USA.

T-Mobile has a great leader,its best resource.

Depending on future spectrum auctions & government intervention, T-Mobile may or may not have enough financial resources to buy into the most needed growth infrastructure : spectrum.

Suggestions from Group SafariTake home message.

Goal: Concentrate on acquiring more spectrum, especially those in the lower bands. All the great changes being brought forward needs to be met with increased data speeds & more reach, both of which will be improved by acquiring more spectrum.

Challenges: AT&T & Verizon Wireless have deep pockets. They can easily outbid T-Mobile in FCC spectrum auctions.

Suggestions to T-Mobile to help achieve the goal: • Involve lobbyists and customer groups to speak up in your favor. • Prove that the changes being brought forward is improving the customer experience in all

facets. • Pressurize the FCC to level the playing field in spectrum auctions.• Form strategic alliances with large spectrum holders such as DISH or Sprint.• Prove to your parent company, Deutsche Telekom; that you have grown up and borrow money

from them to buy more spectrum. They have long lost faith in you, regaining that will allow you access to their deep pockets.

Take home message for other CEOs: Stop copying T-Mobile & come up with your own innovative ideas. Make it simple for the average customer, the plans & service offerings are getting really confusing.

Thank you Q & A

http://1.bp.blogspot.com/-Sq6tIUQ28xM/UVIukHY2x9I/AAAAAAAAVlI/Ru1vxQUbelc/s1600/t-mobile+uncarrier+tmo.png

http://investor.t-mobile.com/QuarterlyResults.aspx?iid=4091145

http://www.tmonews.com/2015/01/t-mobile-q4-2014-financial-results-preliminary/

http://www.ibtimes.com/11-best-quotes-t-mobile-ceo-john-legere-ces-2014-1532934

http://www.statista.com/statistics/283511/average-monthly-churn-rate-top-wireless-carriers-us/

http://qz.com/195641/heres-more-evidence-that-t-mobiles-crazy-strategy-might-just-be-working/

http://www.vodafone.com/content/annualreport/annual_report08/downloads/vodafone_ar_performance.pdf

http://www.fiercewireless.com/special-reports/grading-top-8-us-wireless-carriers-third-quarter-2014?confirmation=123

http://fcc.org