New T-Mobile launches D-Day assault on retail channels

by Steve Blum • , , , ,

Don’t worry if I’m a gone awhile. I’m on a mission.

The T-Mobile/MetroPCS merger was wrapped up this week and now the combined company is packing superior retail firepower.

MetroPCS sells on a no-contract and pre-paid basis, which meshes perfectly with T-Mobile’s business model. It was a good fit. T-Mobile gets three things out of the deal: spectrum, which it desperately needs, nine million customers and MetroPCS’s distribution channels. Over the next two or three years, MetroPCS subscribers will be transitioned off of their CDMA phones, and T-Mobile will light up the cleared spectrum with GSM and 4G services.

But T-Mobile is leveraging MetroPCS’s sales channels starting today. Both rely more on pushing product through a wide range of general retail locations than on company-owned or specialty mobile phone stores. That’s the advantage of the no-contract and pre-paid business model. You can toss a phone in your shopping cart while you’re buying socks at Target and head for the check out line. When that’s the only way you sell, you can pump up those channels without worrying about cannibalising your post-pay contract business. That gives T-Mobile a competitive edge over AT&T and Verizon in the retail universe.

Not having to compete with MetroPCS for shelf space is another instant advantage. Consumer market retailers want a product that explains itself – try getting a mobile phone question answered at Walmart – and moves quickly from the shelf to the shopping cart. Acquiring a major competitor for shelf space simplifies T-Mobile’s sales pitch to retailers.

I’m expecting to see more T-Mobile product at retail points-of-sale and more white label services. T-Mobile just dropped the price of the Walmart Family Mobile package – unlimited talk, text and data – from $45 to $40 a month. That’s a rocking good deal and a declaration of war for domination of check out lines everywhere.