T-Mobile to Target AT&T Customers With iPhone Sales in 2013

NEWS ANALYSIS: T-Mobile CEO John Legere announced an agreement with Apple to start selling the iPhone in 2013 as well as significant acceleration of the mobile carrier’s 4G LTE rollout.  

T-Mobile USA, the nation’s fourth largest wireless carrier, and the only one without Apple’s much desired iPhone, has reached an agreement to start selling the hugely popular smartphone in 2013.

This announcement, which first appeared as a minor point in a Deutsche Telekom financial statement released early on Dec. 6, was confirmed by T-Mobile USA CEO John Legere in a presentation in Bonn, Germany later in the day.

Legere also announced that T-Mobile has significantly moved up its roll-out of its LTE network and the refarming of its HSPA+ network. Legere said that T-Mobile will have “150 million POPs” by mid-2013. By that he means that the LTE network will cover that many people, which makes all of them potential customers. He also said that by the end of 2013 that number will grow to 225 million. The implementation of LTE is seen by many analysts as being critical to launching the iPhone 5, which includes support for LTE Band 4, which is what T-Mobile is rolling out.

“A certain number of customers wouldn’t come to the store if we didn’t have the iPhone,” Legere said in his presentation. “And that’s not a matter that they would buy it, but there was an incredible number of churn. We worked very hard for a deal that made sense for us.”

Legere noted that the DT’s 2013 financials do include the full impact of rolling out the iPhone in 2013. Legere said that T-Mobile will be rolling out Value Plans at about the same time as the iPhone in 2013, making the revenue impact “almost neutral.” Legere said that the T-Mobile’s approach was very different from what’s happened previously and well worth the strategic wait for the iPhone agreement.

“This is not a volume commitment of the type that Sprint agreed to, or anything close to it,” Legere said. “When this device rolls out, it will be a dramatically different experience,” he said, indicating that the actual rollout wouldn’t be for a few months yet.

The iPhone rollout is important to T-Mobile, but it’s only part of the company’s growth strategy. Network modernization is also a key part of the T-Mobile strategy. T-Mobile’s plan includes new radios in towers that lower cost and improve efficiency, the move to 1900 MHz for HSPA+, and the launch of LTE.

While T-Mobile hasn’t said when the rollout of LTE is going to start, if the company is going to meet its mid-year goals, the launch of LTE will have to begin early in 2013. This will be critical for two groups of customers. Existing iPhone 5 customers will be able to begin using LTE much earlier than expected.