Binge Watching Video Could Increase T-Mobile US (TMUS) ARPU - Cowen

T-Mobile US (NASDAQ: TMUS) announced free video streaming with a product called Un-carrier X that Cowen analyst, Colby Synesael, believes will 1) have a minimal if not positive impact on ARPU, 2) materially help net adds, 3) prove difficult to replicate, and 4) help alleviate network congestion.

The service provides free video streaming, for Simple Choice customers on >3GB/mo plans at no extra cost. ” T-Mobile subscribers will be able to watch streaming video without counting against their data allotment for 24 streaming services including some of the most popular (ex: Netflix) with others expected to be added over time.

Concerns around “Binge On” have over the past week have centered on its ability to stunt ARPU growth but it requires customers to have a 3GB plan. The company doesn’t break out how many customers are on lower plans, but Synesael believes that upwards of one-third still are and could be stimulated to upgrade to a higher plan to get access.

In addition, despite reducing pricing on a per GB basis which is what T-Mobile highlighted in its PR, it subtly increased pricing for all its >3GB plans (3GB for $60 is now 6GB for $65; 5GB for $70 is now 10GB for $80; and unlimited is now $95 instead of $80) and altered its flagship $120/4 line plan which now includes 6GB per line opposed to its previous 10GB. While the data top-up admittedly will likely limit most >3GB customers need to further tier up over the near-to-mid-term, we believe the overall pricing changes will have a minimal if not positive impact on ARPU trends.

No change to Outperform rating or $48 PT.

For an analyst ratings summary and ratings history on T-Mobile US click here. For more ratings news on T-Mobile US click here.

Shares of T-Mobile US closed at $37.03 yesterday.

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