T-Mobile’s complete axing of tiered data plans in favor of a single quasi-unlimited option was a huge gamble, and according to analysts with Wells Fargo, it’s one that may end up paying off in a big way for the Un-Carrier. Magenta’s new T-Mobile ONE plan, which was ramped up a bit as of this morning, is attractive enough in its own right to wireless customers who are getting tired of counting their megabytes, as early numbers for T-Mobile’s business since the big reveal have shown. Although, the timing of the deal may be what cinches it as one of T-Mobile’s best marketing moves, as the deal was revealed all but alongside the official launch of the premium Samsung Galaxy Note 7 and just ahead of the next iPhone.
According to Wells Fargo, Sprint competing directly with T-Mobile on the new unlimited data plan front won’t be enough to slow them down much, and they look as though they’ll still have a “hockey stick” jump up in profits, which will cause their free cash flow to jump up in kind. The FCC’s spectrum auction has thus far fallen a bit flat, and may end up being renegotiated. Whether T-Mobile sticks with the $7 billion they were slated to put in at first or decides to pile on more cash to increase their spectrum holdings and build their network out even further, Wells Fargo is saying that they are still slated to have an overall increase in free cash flow.
All of these factors, in addition to the fact that T-Mobile is set to get a decent number of Verizon and AT&T subscribers on board with their new plan, seem to spell a pretty good short-term future for the Un-Carrier. According to Wells Fargo’s Jennifer Fritzsche and some of her peers, T-Mobile is likely to see $1 billion in free cash increase this year, $2.6 billion next year, and $3.7 billion in 2018. Those numbers leave a ton of room for the kind of capex that will see T-Mobile’s network getting to a satisfactory state for future development. A state which means that Wells Fargo has now upgraded T-Mobile shares to “outperform”, from “market perform”.