T-Mobile Adds 1 Million Customers with No Annual Contract

The "uncarrier" blew past all expectations as it added another 648,000 subscribers. This is the second quarter in a row that T-Mobile has seen impressive growth and much of its success is being attributed to the fact that it did away with annual service contracts.

These plans have become popular overseas but T-Mobile is one of the first major U.S. carriers to offer them. As a result of its impressive subscriber growth, T-Mobile was able to outpace AT&T and is now putting pressure on Sprint and Verizon as well.

Coming From Losses

T-Mobile's growth is definitely impressive when just compared against that of its competitors, but after four years of losses, T-Mobile has even more to celebrate. The massive influx of new customers came immediately after T-Mobile did away with its regular contracts, opting for month-to-month contracts instead of the industry standard 24-month deals.

Despite the great report, T-Mobile did fall 1 percent on the stock market but analysts are attributing that to short-term investors cashing out. Overall, T-Mobile's share value has increased by 22 percent since the end of August.

Along with changing its plans, T-Mobile now allows customers to upgrade more frequently. Even though there are no service contracts, discounted phones still come with their own long-term contracts, but T-Mobile allows subscribers to upgrade early as long as they bring back their phones.

A New Trend?

Now that all of the major carriers have introduced early upgrade deals for subscribers (something that was unheard of just two years ago), it may be possible that Verizon, AT&T, and Sprint will follow T-Mobile and switch to similar no-contract plans.

Verizon and AT&T do have some prepaid options but they are generally far less efficient than their main plans. As such, T-Mobile is the only top U.S. carrier to actually switch to no-contract plans.

Alternative carriers such as Ting have...

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