Ahead of T-Mobile USA's (TMUS -3.7%) Jan. 8 "Un-Carrier 4.0" event, AT&T (T -0.8%) has established a "limited-time offer" providing T-Mobile subs with up to $250 in credit if they switch to AT&T and trade in their current smartphone. Another $200 in credit is given to those who sign for a Next smartphone upgrade plan, buy an unsubsidized phone, or activate a phone they already own. (PR)
T-Mobile, whose shares are selling off in response to AT&T's move, is widely expected to use its event to announce it will pay off the early termination fees of users switching from other carriers and trading in their phones; one report indicates up to $350 in credit will be offered.
Jefferies has argued T-Mobile could be "opening a Pandora's box" that leads to tougher competition and margin pressure for AT&T/Verizon. Today's move arguably suggests AT&T takes T-Mobile's expected challenge seriously. But it's worth noting not all phone trade-ins are eligible for a full $250 in credit, and there are no details regarding how long the promo will last.