Friday, January 27, 2017

Sure, AT&T and Verizon are "Unfocused" on Mobile; They Have to Be

Some argue that T-Mobile US is focused; AT&T and Verizon unfocused, where it comes to mobile services, and that explains why T-Mobile US is gaining share, while AT&T and Verizon struggle to add net new subscribers.

As with all observations, there is some grain of truth. T-Mobile US is a mobile-only operator attacking the  market to gain share, and does not have to worry about its future in the same way as AT&T and Verizon do, for one key reason.

T-Mobile US is a strategic seller, while AT&T and Verizon are strategic buyers. That has implications. T-Mobile US only has to add accounts and grow market share. It essentially knows it will eventually be acquired; it only does not know, yet, who the buyer will be.

Even profitability, and the ability to pay dividends, is not an issue for T-Mobile US: growing market share and cash flow are the actual objectives.

AT&T and Verizon must think and act seriously about growing new products and lines of business beyond mobility, as they plan to be in business long after T-Mobile US has been acquired.

That necessarily means working hard on growing internet of things, connected car, video and international businesses, mobile advertising and content services.

So, yes, in some sense T-Mobile US really is more focused. It can do so because mobile is its only business, and a business it intends to sell, someday. Growth, more than profits, is the goal.

AT&T and Verizon must focus on growth outside their legacy fixed and mobile businesses, to survive a shift in the business that T-Mobile US will not survive.

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