T-Mobile has been downgraded by KeyBanc Capital Markets from sector weight to underweight, primarily due to its lack of fiber infrastructure amid increasing consumer demands. The analysis expresses concerns that T-Mobile may experience elevated customer churn as consumers may find better value in competing carriers following recent price adjustments. Additionally, T-Mobile is expected to benefit less than its competitors from potential tax changes associated with broadband initiatives. The downgrade follows T-Mobile's recent launch of its Fiber Home Internet service, which includes multiple pricing tiers with guaranteed pricing.
KeyBanc Capital Markets downgraded T-Mobile from sector weight to underweight, citing concerns about the carrier being 'fiber deficient in a converged/bundled world.' Their analysis indicated issues with T-Mobile’s fiber infrastructure and consumer value following recent pricing changes, raising concerns of customer churn. The downgrade was influenced by expectations that T-Mobile would benefit less than peers from potential tax changes due to the OBBB (Optimized Broadband Buildout Benefits). This change comes on the heels of T-Mobile’s launch of its Fiber Home Internet service, promising a five-year price guarantee.
The T-Mobile Fiber Home Internet service offers plans starting from Fiber 500, which costs $60/month with autopay and a voice line, or $75/month on its own, featuring no data caps and no annual contracts. Fiber 1 Gig is priced at $75/month with similar inclusions, while Fiber 2 Gig offers same-benefit plans for $90/month. The terms also include symmetrical uploads and downloads, and promotion of no monthly equipment fees or installation charges.
KeyBanc's concerns also stem from the competitive landscape where T-Mobile's pricing adjustments could deter consumers seeking better value from rivals. The analysis suggests that in a market leaning towards fiber deployment, T-Mobile's current infrastructure may not satisfy evolving consumer demands for fast and reliable internet service.
T-Mobile’s downgrade comes shortly after AT&T announced plans to speed up fiber deployment to one million additional locations, indicating a competitive rush in enhancing fiber connectivity that may further challenge T-Mobile's market positioning. The recent shift in pricing strategy and product offerings may not mitigate issues regarding the perceived value to consumers.
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