T-Mobile Phasing Out Older Plans, Pushing Customers to 5G

T-Mobile confirmed on June 29, 2026, that it will actively migrate customers off older, low-margin rate plans to its current 5G Go5G portfolio. The phased process will run through the remainder of the calendar year. The company has executed similar migrations before, with one in 2023 driving average revenue per account (ARPA) growth of over 8% among affected users. The current initiative is projected to add more than $2.5 billion in annual service revenue to its top line upon full adoption, providing a clear boost to financial performance.

Context — why this matters now

The wireless industry is in a mature phase of the 5G investment cycle, having spent over $200 billion collectively on spectrum and network deployment. Major carriers are now focused on monetizing these networks by moving users to higher-value plans. This push comes amid a stable interest rate environment, with the Federal Funds Target Rate at 4.50%-4.75%, reducing pressure on financing costs for capital-intensive telecoms.

The catalyst for this specific action is the successful completion of T-Mobile's network integration following its 2020 merger with Sprint. With network parity or advantage achieved versus rivals, the focus has shifted decisively to maximizing customer lifetime value. The company executed a nearly identical plan migration in the second half of 2023, which successfully converted millions of accounts and provided a template for the current, larger-scale effort.

Data — what the numbers show

T-Mobile ended Q1 2026 with 118.4 million total customers. Its postpaid phone average revenue per user (ARPU) stood at $49.85. This trails the $55.60 ARPU reported by AT&T but exceeds the $48.40 reported by Verizon for the same period. The company's Go5G Next and Go5G Plus plans, the primary migration targets, cost between $90 and $100 per line for a family of four.

Metric	Before Migration (Older Plans)	After Migration (Go5G Plans)
Approx. ARPU per line	$38-$42	$52-$58
Annual Service Revenue Impact	Baseline	+$2.5 billion

The 2023 migration event converted approximately 9 million customer accounts. The financial impact was material, contributing roughly 40% of the company's service revenue growth that year. The new initiative aims to convert a larger remaining pool of legacy users, with the financial benefit scaling accordingly.

Analysis — what it means for markets / sectors / tickers

This migration directly benefits T-Mobile (TMUS) by boosting service revenue and margins, a key lever for equity valuation in the telecom sector. It creates upward pressure on industry-wide ARPU metrics, potentially forcing competitive responses from AT&T (T) and Verizon (VZ). Telecom equipment suppliers like Ericsson (ERIC) and Nokia (NOK) could see sustained demand for network upgrades as carriers justify further investment with higher returns.

A key risk is customer churn. While the 2023 migration saw minimal attrition, pushing harder on price-sensitive segments could increase defections to discount mobile virtual network operators (MVNOs) like Mint Mobile or Visible. Verizon and AT&T may also use aggressive retention offers to lure disgruntled T-Mobile customers during the transition period.

Positioning data from options markets and ETF flows indicate institutional investors are net long the telecom sector, anticipating stable cash flows in a potentially slowing economy. Recent flow has favored T-Mobile specifically, with the Invesco Dynamic Networking ETF (PXQ) showing increased accumulation over the past month.

Outlook — what to watch next

The next immediate catalyst is T-Mobile's Q2 2026 earnings report, scheduled for July 24, 2026. Management will provide early metrics on migration uptake and any churn impact. The Federal Communications Commission's (FCC) upcoming spectrum auction in Q4 2026 will test carrier willingness to spend amid these improved cash flow projections.

Key levels to monitor include T-Mobile's postpaid phone churn rate. Any sustained move above 0.90% would signal migration friction. For the sector, the SPDR S&P Telecom ETF (XTL) holding above its 200-day moving average at $98.50 would confirm broader investor confidence in the ARPU improvement thesis.

Frequently Asked Questions

What does T-Mobile's plan migration mean for my current bill?

Customers on affected older plans will receive notifications offering migration to a current Go5G plan. Your monthly bill will likely increase, as these newer plans start at a higher base price but include more premium data, streaming subscriptions, and international features. You can choose to accept the migration, select a different T-Mobile plan, or switch carriers, but your old plan will eventually be discontinued.

How does this compare to what Verizon and AT&T have done?

All major carriers periodically sunset legacy plans to improve financials. AT&T completed a large-scale migration in early 2025, moving users to its Unlimited Premium PL plan, which increased ARPU by approximately $6. Verizon's ongoing migration is more targeted, focusing on specific 4G LTE plans. T-Mobile's move is notable for its scale and speed, aiming to convert most legacy accounts within a single calendar year, a faster timeline than its peers.

Is 5G performance the main reason for these plan changes?

While 5G network capabilities enable premium features like higher-speed mobile hotspots, the primary driver is financial. Older plans were priced for market share acquisition during the Sprint merger integration phase. With that complete, the focus is on profit. Migrating customers to higher-revenue plans is a more efficient path to profit growth than adding entirely new subscribers in a saturated market.

Bottom Line

T-Mobile's forced plan migration is a direct monetization of its 5G network designed to add billions in high-margin service revenue.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.