T-Mobile Promotes IPhone by Letting Current Owners Do Trade-Ins

T-Mobile USA Inc., which will begin offering Apple Inc. (AAPL)’s iPhone for the first time on April 12, will promote the move by letting owners of older models trade in their phones for a lower price on a new one.

Customers who turn in their existing iPhone will get a new iPhone 5 without the usual down payment of $99.99, plus a credit toward future bills, Bellevue, Washington-based T-Mobile said. A 4S model, for instance, will bring a $120 credit.

As the fourth-largest U.S. carrier and the last to get the iPhone, T-Mobile is trying to win over converts and publicize its novel approach to wireless service. The company has dispensed with the typical smartphone subsidies that carriers offer in exchange for two-year contracts. Instead, T-Mobile lets users make a down payment on an iPhone and then pay it off in $20 monthly increments -- with no further commitment.

T-Mobile, the U.S. wireless unit of Deutsche Telekom AG (DTE), made the changes after losing 2.1 million monthly contract customers last year. Along with the new installment approach to buying phones, the company is offering service plans for as little as $50. It’s part of a rebranding of T-Mobile as the “uncarrier,” distinguishing it from larger rivals Verizon Wireless, AT&T Inc. (T) and Sprint Nextel Corp. (S)

T-Mobile also is trying to shore up its customer base by merging with MetroPCS Communications Inc. (PCS), the fifth-largest U.S. carrier. That deal will be voted on by shareholders on April 12, the same day as the iPhone debut.

To contact the reporter on this story: Scott Moritz in New York at smoritz6@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

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