On Wednesday, T-Mobile US Inc said that it would launch a new streaming television service in 2018 after acquiring startup Layer3 TV for an amount that is undisclosed.
The moves come as competitors look for ways to provide content in order to win over customers in a mobile market that is saturated and after the No. 3 U.S. wireless carrier and Sprint Corp, its No. 4 rival, ended merger discussions last month.
Last week, Braxton Carter, the T-Mobile Chief Financial Officer, said at an investor conference that the company would concentrate on smaller, “tuck-in” acquisitions.
T-Mobile aims to launch a subscription service with advertising in 2018 using the technology platform of Layer3 and relationships with content providers. The company will formulate a “variety of offers,” some having low costs, its executives stated during a conference call with reporters.
While the industry has turned to skinnier cable bundles, the Denver-based Layer3 TV that was founded in 2013, has concentrated more on traditional pay-TV packages, offering over 25,000 on-demand titles and 275 high-definition channels in five cities in the United States. The company, established by industry veterans Dave Fellows and Jeff Binder, has marketed itself as a next-generation cable service that offers the integration of online content with linear, enhanced customer service and its own exclusive network for higher quality video.
Mike Sievert, its Chief Operating Officer, said that while T-Mobile will not rule out the original content, it will not be a centre to start.
In November, Sprint said that it would offer unlimited data plan customers with free subscriptions to Hulu LLC, a streaming service, two months after T-Mobile proposed a similar offer with Netflix Inc.
AT&T Inc, which is currently in the process of acquiring Time Warner Inc for $85.4 billion, has already begun bundling HBO, the premium channel, with wireless service.
The service of T-Mobile will enter an already crowded market for online television streaming that comprises of competitors such as Dish Network Corp’s Sling TV and AT&T’s DirecTV Now.
The wireless carrier said that it expects its 17,000 retail stores and over 30 million smartphone shipments per year to help in driving customer trials.
In a research note, an analyst at Wells Fargo, Jennifer Fritzsche, wrote: “We believe the near-term revenue and profitability outlook will be more muted as T-Mobile scales the product and integrates it with their wireless customer base. But we would not underestimate T-Mobile longer-term in the TV space after the disruption they’ve caused in the traditional mobile ecosystem.”
The shares of T-Mobile rose by 0.5 percent to close at $63.83.