Could SoftBank Succeed in Its Acquisition of T-Mobile USA?

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1Q 2014 | IN-1018086


T-Mobile Appeals to SoftBank with “Uncarrier” Strategy


T-Mobile USA has been making waves and has been topping the headlines. The waves have come in the form of its feisty “uncarrier” strategy that has taken pot shots at the traditional mobile cellular operator business model of subsidizing the handset. The handset subsidy model has been a remarkably successful model for the mobile telecoms industry, as it has allowed the operator to reduce the upfront costs of handsets to the customer, and the operator then can recoup the cost of the subsidy over the duration of the end-user’s contract: typically 18 months, but can be as short as 1 year or last up to 2 years.

The uncarrier model helps T-Mobile to shift the debt of the subsidy to a third party, whereby the end-user leases the handset over a period of time. Alternatively, if the end-user is happy to continue using his/her existing handset, then the tariffs can come down by ...

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