Editor’s note: T-Mobile One drives phone subscriber growth while the carrier develops adjacent postpaid segments to counter market saturation, says Technology Business Research Analyst Steve Vachon.

HAMPTON, N.H. – The announcement of a T-Mobile (NasdaqGS: TMUS) and Sprint (NYSE: S) merger is expected by the end of 2017. The anticipated merger would give T-Mobile nearly the scale of AT&T (NYSE: T) and Verizon (NYSE: VZ) in wireless subscribers and wireless revenue while enabling the combined company to penetrate new markets more effectively through its expanded retail footprint and rural network coverage. Furthermore, T-Mobile would be better positioned to capitalize on the upcoming 5G era by combining its 600MHz spectrum with Sprint’s vast 2.5GHz licenses.

Prior to the potential merger, T-Mobile will sustain consistent revenue and subscriber growth through 2018 by sticking to its core Un-carrier strategies, which have benefited the company since 2013. TBR projects T-Mobile will continue to lead the U.S. in postpaid phone subscriber additions in 3Q17, as the company gained 595,000 net additions in the quarter driven by the popularity of T-Mobile One and the recent launch of Netflix On Us.

Though postpaid phone additions are slowing due to market saturation and the success of Verizon’s unlimited data plans, T-Mobile is developing new services in its Other Postpaid segment, which accounted for 222,000 postpaid net additions in 3Q17. T-Mobile’s new DIGITS service generated 83,000 net additions in 3Q17, as the platform is attracting subscribers through conveniences such as enabling personal and company phone numbers to be shared on the same devices.

The low price point and flexibility of SyncUp Drive is also boosting Other Postpaid subscriber growth, as the aftermarket connected car platform is not dependent on new vehicle purchases and can be easily integrated with most existing automobiles. Conversely, T-Mobile’s commercial IoT segment will be strengthened by its NB-IoT network, which is expected to expand nationwide in 2018, giving businesses a more cost-effective means to implementing IoT devices into their organizations.

T-Mobile will also likely continue to lead the industry in wireless revenue growth in 3Q17, increasing wireless revenue by 8.4% year-to-year, as the carrier was buoyed by continued subscriber growth and customers migrating to premium devices such as the Samsung Galaxy S8.

Equipment revenue growth was limited by the split iPhone releases this year, however, as TBR anticipates many consumers delayed upgrading their smartphones in 3Q17 due to the upcoming iPhone X launch in November. Despite recent natural disasters negatively impacting revenue and costs, T-Mobile increased its 2017 annual adjusted EBITDA guidance for the second time, now set at $10.8 billion to $11 billion.

Netflix On Us gives T-Mobile a competitive advantage as the mobility and video industries converge more deeply

The carrier is focused on improving the value proposition of T-Mobile One as it is no longer offering tiered data plans, which offered a less-expensive entry point, and is facing heightened competition from rival unlimited data plans. To combat this, the carrier introduced Netflix on Us in September, which provides T-Mobile One family plan subscribers a standard subscription to the streaming service at no extra cost.

The incentive benefits T-Mobile. The company will not need to make a costly investment, such as acquiring a video provider, to become better positioned to combat Comcast’s Xfinity Mobile and AT&T’s DirecTV Now mobile video strategies.

The potential of Netflix on Us is evident as T-Mobile can capitalize on Netflix’s (NYSE: NFLX) growing customer base, which totaled over 51.3 million paid domestic streaming subscriptions in 3Q17.

(C) TBR