T-Mobile Will Sell IPhone via 'Un-Carrier' Installment Plan - Businessweek

T-Mobile USA Inc. will begin selling the iPhone 5 for the first time on April 12, letting customers buy the Apple Inc. (AAPL) device via an installment plan aimed at challenging the industry's typical long-term contracts. Qualifying buyers can get the phone for $99.99 down, plus monthly payments of $20, T-Mobile said today at an event in New York. Service for the phone starts at $50 per month for unlimited calls and 500 megabytes of data. The approach, part of what T-Mobile calls its "un- carrier" strategy, is a break from the practice of subsidizing smartphones in return for two-year contracts. By not relying on heavy phone discounts, T-Mobile says it can offer less burdensome terms and lower service prices. "Our goal is to give customers the lowest out-of-pocket cost of anyone in the industry," T-Mobile Chief Executive Officer John Legere said in an interview. "We'll see how the competition responds. I don't think the math is going to work out for them." The company is trying to stand out from Verizon Wireless and AT&T Inc. (T), the industry's two largest competitors, which sell smartphones below cost to lock customers into contracts. T- Mobile, ranked fourth, is counting on the plan to reverse a customer exodus. The company, owned by German phone carrier Deutsche Telekom AG (DTE), lost 2.1 million monthly contract subscribers last year. T-Mobile also is playing catch-up with its larger rivals in rolling out a network with long-term evolution, or LTE, technology. The company said today that it has begun offering the speedier standard in seven areas: Baltimore; Houston; Kansas City, Missouri; Las Vegas; Phoenix; San Jose, California; and Washington. Verizon, meanwhile, has LTE in more than 485 cities. To help it compete, T-Mobile has a deal pending to combine with the fifth-largest carrier, MetroPCS Communications Inc. MetroPCS shareholders will vote on the merger on April 12. Legere said today that he's confident the MetroPCS deal gets done, throwing out a jab at Paulson & Co. and P. Schoenfeld Asset Management, two of the larger shareholders that have opposed the terms of the deal. They have expressed concern that the transaction undervalues MetroPCS and loads the company with too much debt. "It will be approved, despite the greedy hedge funds," Legere said. "I'm confident because it makes huge sense. And the alternatives for MetroPCS are a bit fictitious." Representatives for Paulson & Co. and P. Schoenfeld Asset Management didn't immediately respond to a request for comment. Legere said the addition of the iPhone -- the top-selling smartphone in the U.S. -- will help end customer losses in 2014. T-Mobile is the last major U.S. carrier to begin selling the phone, following AT&T, Verizon and Sprint Nextel Corp. T-Mobile also is offering BlackBerry's new Z10 phone using a similar installment plan. And it will begin selling Samsung Electronics Co.'s Galaxy S4 on May 1. To contact the reporter on this story: Scott Moritz in New York at smoritz6@bloomberg.net To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net via Technology - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNHkqmv3Hq5olUrz2cenFs3w-LEZRA&url=http://www.businessweek.com/news/2013-03-26/t-mobile-will-sell-iphone-via-installment-plan-in-industry-shift

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