NEW YORK T-Mobile USA, the No. 4 U.S. mobile phone service, said on Wednesday it is offering a $50 per month service plan to long-time customers in San Francisco, in the latest sign that U.S. operators may be facing a price war.
Under the promotion the company is also offering customers a $135 credit if they switch from a rival service to T-Mobile USA, a unit of Deutsche Telekom (DTEGn.DE).
The test promotion comes after Sprint Nextel (S.N) unit Boost Mobile launched an all-in mobile plan for $50 a month in January. T-Mobile USA is seen by analysts as the carrier most vulnerable to losing customers to Boost.
A T-Mobile USA representative said the plan would only be available to customers who have used its service for 22 months or more and that as the company has "additional details regarding a national plan it would provide" them.
UBS analyst John Hodulik said in a research note that he expects the plan to be available nationwide in coming weeks.
Hodulik said the plan effectively lowers T-Mobile's price for unlimited voice, Web surfing and text messaging to $85 a month from $100 for customers who use data services.
"We believe T-Mobile intends to offer the plan nationwide in a few weeks, adding to competitive pressure in the postpaid market," said Hodulik, referring to the market for postpaid customers who pay monthly bills.
Verizon Wireless, a venture of Verizon Communications (VZ.N) and Vodafone Group Plc (VOD.L), is the biggest U.S. wireless carrier in terms of subscribers and along with No. 2 provider AT&T Inc (T.N) it depends heavily on postpaid.
Hodulik said that the plan could help T-Mobile USA convince customers not to leave for rival services but because it only applies to long-time customers it may not put too much pressure on Verizon and AT&T to follow suit.
"It's not a frontal assault on the pricing umbrella but it is eating away at the edges," he said.
Boost Mobile's Chief Marketing Officer Neil Lindsay said in an interview with Reuters earlier in the day that early adoption of Boost's $50 unlimited service plan had "exceeded expectations" since its late January launch.
Sprint, which has been steadily losing customers to rivals, is scheduled to report quarterly earnings on February 19.
(Reporting by Sinead Carew; Editing by Phil Berlowitz)
Our top photos from the past week.