T-Mobile Continues To Gobble Up Market Share, Now 3rd Place In The U.S.

Boasting the strongest fourth-quarter subscription growth in the U.S. wireless industry, T-Mobile US Inc TMUS is annexing market share from its three major competitors.

“Now the third-place U.S. wireless service provider, T-Mobile has evolved from a turnaround story to an industry powerhouse under CEO John Legere,” Argus analysts wrote in a Tuesday note.

The company reported significant profit and cash flow, and Argus researchers expect continued growth fostered by innovative plans and staggered introduction of new customer benefits.

What T-Mobile’s Doing Right

Analysts attribute rising subscription figures to creative perks for the "uncarrier rate" plan, including ticket giveaways, free stock and complimentary in-flight Wi-Fi. These benefits have been augmented by video and music streaming services, unlimited access in Mexico and Canada, data rollover and three free smartphone upgrades each year.

“We expect more service plan innovation and marketing salvos from this scrappy wireless telecom,” Argus reported.

Related Link: Shots Fired! T-Mobile CEO Takes Wireless Wars To Twitter

T-Mobile’s marketing strategy has been effective enough to force a reaction from competitors like Verizon Communications Inc. VZ, which began offering unlimited service plans to rival the T-Mobile appeal.

“The other three major carriers are running scared in the face of TMO’s marketing ploys and competitive discounting,” analysts wrote.

In response to T-Mobile’s growth, Sprint Corp S developed a 50-percent discount plan, AT&T Inc. T diversified out of the market, and Verizon began shifting focus to wireless video.

T-Mobile's Weak Spots

Despite its expanding market share, T-Mobile is slow to grow financially. Argus raised its financial strength rating from Low to Medium-Low — the second-lowest rank out of five — based on a slight reduction in the debt-to-capital ratio.

Because of the company’s position among competitors, Argus reiterated a Buy rating with a $70 price target. It also raised its 2017 EPS estimate 5 cents to $1.90 and forecasted 2018 EPS at $2.22.

Shares spiked 5.5 percent Friday and were trading down 1.8 percent Tuesday at $62.78.