If there’s one group of people that constantly provide frustration to my working life, it’s financial analysts. In my role, running TodaysiPhone.com, I come across them a lot. Normally, they’re making crazy predictions about what Apple’s going to release next or daft predictions on the company’s financial results. Normally, they’re wrong. But that’s not what frustrates me the most. As a financial analyst, the focus is never on what really matters the most: The consumer. If what a company’s doing isn’t going to create financial growth at a stupendous rate, it’s deemed a bad move.
According to Reuters, Wall Street is now concerned by the recent moves by U.S. carriers. Particularly T-Mobile. Having gone on the offensive in 2013, Tmo’s Uncarrier movement has stirred knee-jerk responses from its competitors. AT&T’s recent attempt to lure Tmo customers away with the promise of up to $450 and Sprint’s new marketing campaign to attract families are of particular concern. If Verizon also responds, it could mean a drop in profits across the board.
While discounts are always welcomed by consumers, the intensifying competition is a new challenge to a U.S. industry long used to imposing its will on consumers, and analysts fear it could result in the loss of billions of dollars of revenue.
Reuters also goes on to note that these analysts hope that Verizon and AT&T “shrug off” T-Mobile’s moves since they control over 60% of the market.
With T-Mobile continuing to expand coverage, and offering the best deals on the market, I’m sure Tmo’s hopes are along the same lines. If the big carriers don’t respond, it’ll leave T-Mobile attracting even more customers than it already has.
For me, a measure of a company’s success is a lot to do with customer happiness and – of course – profit. With T-Mobile bringing in so many customers every quarter, its own profits will go up. When a company’s main focus is pleasing Wall Street, customers inevitably end up unhappy. And, it is rather typical that when one company seeks to change an industry well-known for its lack of regard for the customer, that the analysts get “worried”.
As explained by T-Mobile chiefs during the interview at CES (after the keynote), the average ETF buyout is around $150 per line. Most customers are quite far in to their contracts, and so there are very few requiring a the full $350. And, since the deal requires a trade-in, which is guaranteed to make Tmo some money, there’s very little need for any analysts to show too much concern. John Legere may not come across as the typical, pretentious business-man, but you only need to listen to his responses to questions on profitability and financials to realize he understands it just as well as any suited-and-booted CEO.
Bottom line: It might not be good for Wall Street, but T-Mobile’s moves to change the industry have been much-needed in the industry for years.
Via: Reuters