The U.S. telecom industry is in a very interesting phase. The four national carriers – Verizon (VZ, Financial), AT&T (T, Financial), Sprint (S, Financial), and T-Mobile (TMUS, Financial) – released the quarterly earnings recently. While Verizon, AT&T, and T-Mobile rejoiced the increasing subscriber base, Sprint’s declining customer base continues to be a drag on its results. And this is actually worrisome for the Kansas carrier.
Sprint in deep trouble as T-Mobile encroaches
On one hand Sprint is continuously losing subscribers quarter after quarter, on the other, T-Mobile is attracting more customers through its aggressive plan strategies. Sprint has lost at least 1.8 million subscribers year to date. In addition, in the past quarter it recorded retail churn rate of 2.18% – the highest in the past six years. In contrast, T-Mobile’s subscriber gain was the key highlight of its results. The carrier attracted 2.3 million customers under its network. Now that’s a pretty big number considering the operational scale of the company.
Apart from this, Sprint’s larger rivals had a decent quarter too. AT&T‘s subscriber base grew by a healthy 2 million. This was led by the popularity of the Dallas-based carrier’s connected devices. The Big Red too headed for a strong quarter based on its subscriber base addition. Verizon added 1.52 million postpaid customers in the last quarter, thanks to the solid tablet and smartphone sales.
As Verizon and AT&T’s subscriber base is expanding, their gap with Sprint is getting wider. However, this is not as bothersome to Sprint as T-Mobile’s increasing subscriber base is. In the past few quarters, T-Mobile has acted very aggressively to catch up with its larger rivals. And at the third spot, Sprint is the closest. T-Mobile’s chief executive, John Legere, has on several occasions expressed the chances of the company surpassing Sprint. After the last quarter’s results, the fourth largest carrier is feeling closer than ever to cross Sprint to acquire the third spot. This may just be a quarter away.
Sprint’s subscriber base now stands at 55 million customers. On the other hand, T-Mobile’s customer base has expanded to 53 million after the addition of 2.3 million subscribers in the last quarter. If the company continuous to add customers at the same pace, it could outshine Sprint very soon.
Is there a hope?
Under the current circumstances, T-Mobile appears to be the clear winner bettering Sprint in the next quarter. Apple’s (AAPL, Financial) lately released its flagship product, the most awaited iPhone 6 and iPhone 6 Plus. This can change the game completely. The effect of the smartphone sale is yet to be incorporated in the financials of the carriers. T-Mobile has a variety of offerings ranging from the iPhone to the Nexus 6, Note 4 and Z3 that are in the lineup. Such devices clubbed with the difficult-to-resist plans offers the company a solid position.
Sprint too isn’t sitting idle. It has unveiled plans at attractive prices to retain and attract subscribers. But how effective and useful will that be remains to be seen. Things look a bit difficult to predict in the current shape. The next quarter would be a better indication of the rankings.
In the beginning of this year Legere had predicted that by the end of 2014 T-Mobile would cross Sprint on the basis of total subscribers. If we see the recent history of Sprint’s and T-Mobile’s subscriber base, it would reveal how the latter has gained subscribers at an incredible rate, while Sprint is going down the charts. Acquiring the third position in the U.S. wireless market might sound like a big declaration by Legere, but he has numbers to back his assertions. T-Mobile may be the tiniest of the four national wireless players, but when it comes the subscriber addition, it clearly stands out from the rest. It would be interesting to see how things unfold over the next quarter.