Tags: tmobile | swagger | dish

T-Mobile Swagger Is What Dish Is Missing

T-Mobile Swagger Is What Dish Is Missing
(Alexey Novikov/Dreamstime)

Tara Lachapelle, Bloomberg Opinion By Monday, 29 July 2019 02:22 PM EDT Current | Bio | Archive

T-Mobile US Inc.’s guerrilla-style marketing and remarkable brand overhaul – one that even included CEO John Legere reinventing himself – shows what it takes to truly disrupt the market when you’re starting from last place. Are Dish Network Corp. and its chairman, Charlie Ergen, willing to go to the same lengths?

Dish, the satellite-TV provider, wants to start selling wireless phone service to compete with T-Mobile, AT&T Inc. and Verizon Communications Inc. The biggest underestimated hurdle is how it tells that to consumers. After all, Dish’s ability to steal away subscribers is what the federal government is counting on to foster competition so that T-Mobile’s takeover of Sprint Corp. doesn’t result in higher prices. 

The U.S. Justice Department mandated last week that T-Mobile and Sprint sell the Boost and Virgin pay-as-you-go businesses and some spectrum licenses to Dish to help it eventually build its own high-speed 5G data network and become a formidable competitor. (It gets to rent access to T-Mobile’s network in the meantime.) That will give Dish a good jump-start, but putting together a wireless network is a costly, intricate process. Indeed, Ergen has been looking for the assistance of a deep-pocketed partner, with speculation centered on tech giants like Google or Amazon.

More importantly, the difference between becoming a success story like T-Mobile and a basket case like Sprint isn’t just network quality. Brand reputation plays a huge role, and Dish has a long way to go. For starters, pay-TV operators aren’t exactly beloved by consumers, and Dish isn’t a name currently associated with mobile-phone service, although T-Mobile wasn’t always winning awards for popularity either. 

I find this to be one of the most fascinating and instructive statistics about T-Mobile’s turnaround: The company’s selling, general and administrative expenses, which comprise things like marketing costs, were equal to 53% of gross profit last year. That means more than 50 cents of each dollar of gross profit was going to SG&A, and it’s been that way for years. That compares with only about 40 cents at both AT&T Inc. and Verizon Communications Inc., and even less at Sprint.

This goes beyond just run-of-the-mill advertising, for which T-Mobile and Sprint have equally spent roughly $10 billion over the past eight years. If you’ve ever seen a T-Mobile corporate or consumer event, you know that the company pulls out all the stops when it comes to magenta props and swag. Even its quarterly earnings calls, which can be streamed live on YouTube, are a branding bonanza: The executives’ outfits are playfully emblazoned with the magenta T, as are their microphones and almost anything else in the background. Legere, at one time a suit-wearing businessman indistinguishable from all the rest, can now be spotted in pink whenever he’s out for a run or testifying before Congress. He records a Facebook Live cooking video each week called “Slow Cooker Sunday” sporting a T-Mobile apron. The 61-year-old Massachusetts Institute of Technology grad is the company’s very own social-media influencer, and shameless self-promotion is part of T-Mobile’s corporate ethos.

It’s over the top, but it’s been an incredibly effective strategy that's every bit as responsible for T-Mobile’s ascent over the last few years as were its decisions around spectrum and pricing. As for Sprint, improving its network is merely a matter of money (which it’s short on). But revamping the Sprint brand perception would have required much more than its billionaire controlling shareholder, Masa Son, writing a check. 

Dish also can’t make the same mistakes it did with Sling TV. Sling was one of the earliest entrants to the video-streaming market, but Dish neglected the product, and a too-little-too-late advertising push hasn’t shielded it from an onslaught of new competition. 

These reasons are why I’m skeptical Dish can be the antitrust cure that the Justice Department has deemed it to be. T-Mobile seems to be betting Dish isn’t a serious threat either. If so, “they’re betting wrong,” Ergen assured my Bloomberg News colleague and me in an interview last week. “But without question, if you only do one thing right, you've got to have the best network,” he said. Otherwise, “you’re wasting your money from a branding perspective.” 

Dish needs to get both right if it stands a chance of someday catching T-Mobile. 

Tara Lachapelle is a Bloomberg Opinion columnist covering deals, Berkshire Hathaway Inc., media and telecommunications. She previously wrote an M&A column for Bloomberg News.

© Copyright 2024 Bloomberg L.P. All Rights Reserved.

The satellite-TV company is on the receiving end of valuable assets that T-Mobile has to sell. That doesn’t guarantee success for the wireless newbie.
tmobile, swagger, dish
Monday, 29 July 2019 02:22 PM
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