CEO John Legere (who was formerly with AT&T) announced that T-Mobile added 1.6 million subscribers in the fourth quarter.
Under the Breakup Plan, the company will offer a $300 trade-in credit and up to $350 in early termination fees. The catch: Users must trade in their phone; their phone numbers will be ported over.
"I think T-Mobile is making major waves in the carrier business and is a great choice for consumers," said John Quain, personal technology contributor to The New York Times.
T-Mobile's announcement came just days after AT&T announced its controversial sponsored-data program.
The giant plans to let brands subsidize user data so that streaming their content would not count toward monthly data usage.
Federal Communications Commission Chairman Tom Wheeler used his talk at CES on Thursday to put AT&T on notice, citing concerns about interference with the Web and anti-competitive practices. The program could boost brands that can afford to pay for customer data, while hurting start-ups.
"The FCC is likely to simply watch and see what happens," said Craig Moffett, partner and senior research analyst at Moffett Nathanson. "It's not clear on what jurisdictional grounds they could object even if they wanted."
—By Christina Medici Scolaro
Correction - An earlier version of this article referred to CEO John Leger. This version corrects the surname. Also, this version specifies that phone numbers will be ported over.