T-Mobile | Bloomberg West Interview – John Legere, CEO of T-Mobile US, Inc.

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T-Mobile | Bloomberg West Interview – John Legere, CEO of T-Mobile US, Inc.


Much of the decline in PC sales can be blamed on the huge popularity of, of course, mobile devices. Gardner said today that inexpensive tablets are replacing PCs as the devices of choice, especially for lower end consumers. One of the company's trying to take advantage of the explosion in mobile growth is T-Mobile USA. At an event today, the company introduced a new program called Jump, which will allow customers to upgrade their phones twice a year. T-Mobile says it has also expanded its 4G LTE network faster than anticipated. For more on that, let's get to our editor at large, Corey Johnson, who is standing by with T-Mobile USA CEO John Legere. Corey? Yeah, John Legere joins me now from New York. John, glad to have you back on the show.

Talk to me about your news today. Corey, I'm glad you're here up front because this way I don't have to wait till split screen when you tell me what you're really thinking then come back and say, hey, where is that Cory guy? I can hide. I can duck and dodge and weave if necessary. So you guys are announcing more tweaks to your customer plans. Describe that to me. Well, we were together last time. Remember, the main thesis for T-Mobile is to solve those pain points that have made customers absolutely hate the wireless industry as the "un-carrier." And what we did in the beginning was they hate contracts. We got rid of the contracts. They hate that complex rate plans. We came up with very simple rate plans-- easy to understand.

They hated very expensive upfront payments for devices, and we came out with the equipment installment plan, which they loved. Now there was a pain point that was missing, and we wish we could have solved it the first time. We came back and got it, and that is customers absolutely can't stand when they're not allowed to upgrade their devices. So this main announcement that we made today-- I'll give you a couple of others-- but it's called Jump. And contrary, Emily, you referred to it as every six months. After six months you can upgrade twice a year. So you can actually jump on month 7 and month 8 if you choose to. And the key thing here is that it's the same price that customers pay now for handset insurance. So for similarly the same price, $10 a month, you get full protection and the ability to upgrade twice a year, which is one of the big pain points.

730 days is way too long to wait either because you've got a cracked phone, you've got a possessed phone, or frankly you're just pissed because the little girl sitting next to you has a better phone than you. I don't want to dominate to much, but I will tell you we also did announce that our deployment of LTE hit 157 million pops-- smoking speed. And we announced a simplified rate plan for families-- four lines, $100, no contract, and no credit check, which allows one third of the families that don't qualify now to get the plans that they need. And fun news for you because you're one of the cities-- I think you're all in the Bay Area-- we did discuss today just a little tidbit of the coming announcement on August eighth of our results that in seven major cities that include San Francisco in the month of May, we led all carriers in net new ads for the business.

So sorry to ramble on, but you gave me a shot. No, no-- that's all right. It's a big day. You got a lot to say. Look, you guys last measure last year-- 11% market share, making you fourth of the carriers. Sprint is 16% Verizon and AT&T; may be out of reach. But do you expect any meaningful change in that in this year? Do you that's going to take longer? Obviously, these are all efforts in that direction, right? Yeah, the reason I gave a number of statistics today that suggest things are not only going as well as we thought, they're going better. And we're continuing to innovate in the space of solving customer pain points. How about one statistic I gave today. Talk about a year's difference. A Baird equity study looked at likely switchers. And as you know in this industry now, the switching pool is extremely important. And of the potential switchers, they said they're likely to switch to 9% Sprint, 10% AT&T;, 19% Verizon, 26% T-Mobile.

So what we're doing is not only working with our current results, but it suggests that there's a large pool of people stuck in those contracts that are planning on coming. Now that they've seen jump, they're planning on coming even more. So I took a look at your churn rates recently, and they're good and getting better. And I wonder-- that's obvious about a lot of things. But I wonder if the churn rates also get better on certain devices. When you talked about the switching, we've seen studies that suggest that people are less likely to switch from an iPhone than they are from an Android phone. Does the device that you offer affect those switch rates? I don't know the answer. Here's what I do know. With Jump right now, I would say the biggest variable is the psychological variable that they can upgrade.

Statistically, you learn a lot about when you limit people's ability to upgrade how often do they upgrade. But the psychological limitation of not being able to is the biggest variable that we're going to move. And you said you looked at our churn rates. What I can tell you is our churn rates are better right now than you've ever seen them. And Jump is not only an offensive play because we think it's going to raise gross ads and it's going to lower churn, it's defensive. It's the kind of things that we need to do since we're a no-contract player to make customers stay with us for a number of variables, including great service. So it's an important next phase, and so far the reaction has been exactly what I thought it would be. Are the customers that you're going after are demographically and importantly in the way that they spend and the way that they consume data-- how do they differ from some of their customers? You talked about no credit checks and so on.

Do those people use as much data? Are they as valuable a customer as a Verizon business customer or something? Yeah, Corey, I think what you have to do is you have to look at each thing we're doing separately. Let me give you a couple of things to think about. "Un-carrier" phase 1-- when we deployed "un-carrier phase 1, what I can tell you is that traffic in our stores was way up-- virtually double in some places. Credit apps doubled. But how about this? Prime credit apps, which is a higher form of customer than naturally over time would have been the T-Mobile customer, tripled. So "un-carrier" phase 1 brought a very high quality of customer. And now what we're doing is we're shifting and saying, hey, wait a minute. First of all, family plans are the number one decision criteria for post-paid decisions. It's number three for prepaid. And 1 out of 3 families does not qualify for a number of reasons to go through a credit check.

So we're moving the other direction. These have nothing to do with each other. This is a new group of people. And through various mechanisms, we think this group of people that you can use a deposit up front with a very affordable plan and the ability for them to bring or buy their own devices-- it's both ends of the spectrum. These are good customers. John, when you look at the phones themselves-- we've heard from carriers off the record who really complain about particularly the iPhone subsidies and having to pay that and looking for another option out there. Do you see that as a hurdle, as a difficulty when you've got to pay so much for a Samsung Galaxy 4 or for an iPhone 5 that it really hurts your ability to make a profit? You know what is the best part of what you said? I'll tell you what hurts them is the fact that they're telling you off the record that they don't like this variable about serving the customers.

Because frankly, they don't have the balls to say it either to the manufacturers or to the customers. And what we're doing is saying, hey, this is what we do. We're providing you simple, affordable services, and here's the devices. You love them. This is what carriers charge. You're paying. This is what you pay. We'll help you. We'll do an equipment installment plan, but this is it. And by the way manufacturers, here's your customer. Talk directly to them. If you want to innovate, we'll make it easier and faster for them to be able to upgrade. And if you want to innovate in price, go at it. But that's your game, and our job is to give the broadest array of devices at the cheapest out-of-pocket price coupled with the best services so that over time when the financing whatever you choose to do with the device is gone, you've got a great way, cheap and affordable, but it's transparent. And that's the game.

And actually so far, I think the equipment manufacturers like it. They're getting to see their customers. They're not hiding behind carriers as to how they play, and they're able to innovate and go direct. But I'm calling it like it is. I say it to the customers. I'll say it to the manufacturers. And the longer these guys hide and don't tell the family secrets, it's so beautiful for me because this is just a broken industry with a bunch of arrogant people that don't know how to tell it like it is to a group of intelligent customers who have the wherewithal to buy the most important device in their life. And they want it when they want it as many times as they can, and that's what we're doing. John, I know you probably can't see me in return there. So as far as you know, I'm also wearing the exact same thing you're wearing right now-- the pink T-shirt and all.

Because why wouldn't I? Well Corey, what I want to know is there's hope because of the net new ads in San Francisco. We had 500% take of the pool in May. So if we didn't get you in May, we're coming back for you in July. They're coming for me. I'm afraid. T-Mobile USA CEO John Legere, thank you very much. Appreciate it. Emily? John Legere and that Corey guy together at last. Thank you, Corey.
T-Mobile | Bloomberg West Interview – John Legere, CEO of T-Mobile US, Inc. T-Mobile | Bloomberg West Interview – John Legere, CEO of T-Mobile US, Inc. Reviewed by Admin on 2:40 PM Rating: 5

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