Since the AT&T acquisition deal was nixed last year T-Mobile has found itself perched precariously on the edge of the abyss of irrelevance. Without a competitive LTE 4G network and being the only one of the Big Four carriers to not offer the iPhone, T-Mobile was, and still is, haemorrhaging customers at an alarming rate. In fact, for years now T-Mobile has virtually sat on the sidelines of the smartphone race, watching competitors both big and small take bites out of both sides (prepaid and post-paid) of its subscriber base.
But six months ago the Deutsche Telekom subsidiary made the announcement that it would be looking to sell off certain network assets in order to generate enough cash to further its much needed LTE network development, apparently in hopes of actually entering the modern mobile market, and this week that plan has come to fruition.
T-Mobile announced that it has leased the control rights of 7,200 of its cell towers to Crown Castle International, one of the expected suitors, in a deal that will add $2.5 billion to T-Mobile’s network modernization project. But even with these funds, will T-Mobile ever be able to compete with the country’s largest wireless providers?
There’s no question that becoming competitive in the cutthroat American mobile market is Plan B for T-Mobile, given the fact that its parent company Deutsche Telekom clearly wants nothing to do with it. While I initially questioned the wisdom of selling off valuable wireless infrastructure assets in an effort to fund the company’s revised ‘network modernization’ strategy, it seems that T-Mobile has done things the right way (for once), meaning that this deal with Crown Castle International may actually be the first step back to relevance for the country’s fourth largest wireless carrier.
To wit, six months ago I struggled to find the logic in selling off wireless infrastructure to generate revenue to build more wireless infrastructure, the assumption being that such towers would need to be employed in any future LTE development. But by leasing instead of selling, not only does T-Mobile retain ownership of these towers, but it will likely have to pay less now to access them then it would to own and manage them independently.
Further, the revenue generated from this agreement will certainly help fulfill T-Mobile’s “Challenger” strategy, the company’s short term plan to expand its mobile offerings and to once again legitimately be considered one of the country’s largest wireless providers. While the money is certainly not enough to completely reinvigorate the company, it’s certainly a start.
As I’ve said before, however, while creating a 4G LTE network is an absolute must, once it is created the company will still barely be on par with its chief rivals Sprint, AT&T, and Verizon, saying nothing about the fact that T-Mobile still offers a relatively paltry selection of smartphones and still finds itself on the outside of Apple’s iPhone party.
In fact, while network speed, coverage, and reliability are all vitally important for consumers, the fact that soon all four of Americas top wireless carriers will have functional LTE networks means that it will become almost a non-factor in choosing a carrier. What will really sway subscriber opinion will be options, particularly when it comes to smartphone choices and contract bundle selection, and even with the company’s competitive pricing, that’s an area where T-Mobile still can’t compete.