The U.S. wireless industry is getting increasingly competitive with time. T-Mobile (TMUS, Financial), the fourth largest carrier, recently reported its first quarter 2014 earnings. According to Neil Shah, analyst at CounterPoint, the telecom provider has surpassed Sprint (S, Financial) in terms of smartphone sales. Now the wireless provider is inching closer to AT&T (T, Financial).
By the numbers
Apple (AAPL, Financial) revolutionized the smartphone arena completely and Samsung (SSNLF, Financial), with its reasonable offering, penetrated the global market further. As of now, smartphones make for around 87% of the entire handset market in the U.S, which is nearing saturation now, and as a result of which growth has slowed down a bit. Earlier carriers were selling smartphones in huge numbers, but now sales have become heavily dependent on incentives and discounts. This is the exact technique T-Mobile has adopted to sell in good numbers.
T-Mobile, together with its prepaid brand MetroPCS, sold 6.9 million smartphones in the first quarter in comparison with Sprint that sold nearly 5 million handsets. AT&T did not release it smartphone sales figures, but T-Mobile looks quite close to the Dallas carrier’s numbers. The Bellevue-headquartered carrier started selling the Android phone G1 before any other telecom provider began offering models provided by other handset manufacturer – this gave it an edge over its peers.
The Edge
The past few quarter haven’t been that good for Sprint as its network service has been witnessing disturbances, thereby creating huge customer dissatisfaction. This is largely due to the 4G LTE network upgrading program the company is undergoing. The shutdown of the Nextel network also resulted in a huge loss of subscribers.
In the meanwhile, T-Mobile has picked up well. The uncarrier approach that it implemented helped the wireless provider in a big way in terms of gaining subscribers. Smartphone buyers generally get entangled in the two-year contract with telecom majors Verizon (VZ, Financial) and AT&T, but T-Mobile gave buyers a way out of this. Obviously, T-Mobile is reaping the benefit which is visible in its customer base that is seeing phenomenal growth. Not only is the company adding new subscribers, but there are several customers who are shifting from rival’s network, particularly AT&T, to T-Mobile’s.
AT&T is facing increased competition from fellow players. While Verizon is strengthening its network and widening coverage under its network infrastructure upgrading program, T-Mobile is poaching AT&T’s customers. There was a time when AT&T had exclusive rights to sell the iPhone, but now all four national carriers offer the device.
Departing Thoughts
T-Mobile’s effort is paying off. There’s no doubt that Sprint’s subscriber base is more than T-Mobile, but with its aggressive moves the latter looks poised to give other wireless providers a tough run for its money. Not just this, AT&T is also feeling the heat of T-Mobile inching closer. True, that the smaller carrier is way behind the second largest U.S. telecom major when it comes to subscriber base, but its strategic plans of providing flexible and user friendly offerings are eating into AT&T’s subscriber base. The fact that T-Mobile has outsold Sprint, in terms of number of handsets sold, is a big achievement for the company. With persistent effort T-Mobile looks set to turnaround the wireless rankings.
