T-Mobile's CEO Makes A Statement About Future Phone Prices That Is Music To Customers' Ears

During the earnings call on Wednesday following the release of T-Mobile’s Q4 and full year 2025 earnings report, CEO Srini Gopalan was asked about comments he had made earlier about moving away from device subsidies. The executive responded by saying that T-Mobile will always be competitive with phones. He also said that there is a shift in focus from traditional promotions based on device subsidies to offerings driven by value.

Examples of bill-credit subsidies offered by T-Mobile

Some examples of current bill-credit subsidies offered by T-Mobile include the carrier’s iPhone Promo with a new line. This gives a T-Mobile subscriber up to $34.59 in monthly bill credits for 24 months with the purchase of an additional line. Or, you can trade in an eligible device and get up to $9.59 a month in bill credits for 24 months with the purchase of a Samsung Galaxy phone. Now let’s take a look at the iPhone promotion. 24 months of a $34.59 bill credit gives you a credit of $830.16 over two years. That’s enough to snag a free iPhone 17 base model.

You might be asking yourself, wasn’t T-Mobile the first to stop the old two-year contracts and subsidies? Yes, in March 2013 T-Mobile announced that it would replace two-year contracts with a subsidized phone for Equipment Installment Plans (EIP), which allowed customers to pay for their phones monthly. The difference between then and now is that back then, the subsidies were used to reduce the price of a device. Now, subsidies are bill credits.

Comparing old subsidized plans with today’s plans

One thing to point out. Customers complained in the old days of being locked to their carrier for two years. But what many fail to understand is that they are still locked in with the modern monthly bill credits. Let’s explore this. In the old days, you’d pay $199 for a $649 iPhone. You would sign a two-year contract. Leaving early would invoke the Early Termination Fee (ETF) which would cost you $150 to $300. These days, you finance a new phone over 24–36 months and the carrier gives you a monthly bill credit that reduces the monthly cost of the device. If you leave before the finance period ends, you owe immediately for the unpaid balance of the phone, which could amount to $800-$1,000.

While T-Mobile didn’t officially commit itself to the end of subsidies earlier this week, the conversation during the earnings call was more about how current subsidies might evolve. T-Mobile CEO Gopalan said that today’s higher priced and longer-lasting phones change the economics of subsidies. The executive stated that the new talk about subsidies is focused on sustained value and customer lifetime value. Right now we might not know exactly what that means, but eventually we will.

Competition between Verizon, AT&T, and T-Mobile is fierce

I could tell you that this exciting new future for subsidized phones was behind the big move in the carrier’s stock on Thursday, which took it as high as $220.84 before closing at $214.68, up $5.14 or 2.45% on the day. But the actual reason for the stock hike was a higher multi-year outlook estimated by the company during the same earnings call where Srini Gopalan brought up subsidies. In addition, Goldman Sachs and Barclays raised their price targets on the stock, leading institutional investors to add to their holdings.

The competition between all three carriers is so fierce. T-Mobile is the most aggressive of the trio due to the 24-month financing for smartphones that it promotes as its “New in two” program. However, smartwatches and tablets financed via T-Mobile changed to 36-month financing last November to match AT&T and Verizon. It’s more likely that T-Mobile will eventually join Verizon and AT&T by moving to 36-month financing for smartphones than seeing Verizon and AT&T match T-Mobile at 24 months for handsets.

It’s interesting that many of our younger readers might not remember the old subsidized contracts that allowed me to buy a phone like the Motorola DROID for only $199 as long as I remained a Verizon customer for two years. It’s kind of odd that the carriers didn’t want to give up those subsidies at first because, with the modern-day subsidies, they make out much better with the modern subsidy plan.