Sprint Retains Third Spot in Wireless Market…Despite T-Mobile’s Bold Predictions

by Matt Klassen on May 8, 2015

Following the last round of quarterly reports from America’s wireless carriers, T-Mobile took issue with the fact that, by the numbers, Sprint was able to retain third place in the market, with company CEO John Legere arguing that Sprint’s numbers were flawed and boldly predicting that if T-Mobile hadn’t passed Sprint already, it would do so by Q1 2015.

It actuality the prediction didn’t seem that bold at the time, as T-Mobile’s numbers were on the rise due to the company’s ongoing UnCarrier marketing campaign and Sprint was still surrounded by uncertainty, the company unable to put up much of a marketing fight and analysts uncertain if the Sprint’s customer gains were a blip on the radar or a sign of a sustained turnaround.

Perhaps knowing that Sprint was on the ropes, moments away from a knockout, makes the Q1 2015 results that much more significant, as it turns out T-Mobile’s Legere will have to eat his words (at least for the time being), as Sprint has retained third place in the American wireless market. But Sprint’s victory, however temporary it may be, has come at a cost, as the company’s own aggressive value-added campaigns have landed it squarely in red, meaning that while it may no longer be haemorrhaging customers, it is now haemorrhaging money.

In the first quarter of 2015 Sprint reportedly gained 1.2 million new customers, bringing its overall customer base to 57.1 million. By comparison, T-Mobile added 1.8 million customers, bringing its own total subscriber base to 56.8 million, just shy of its third place rival.

As mentioned, despite Legere’s bold prediction that T-Mobile had already passed Sprint for third place in the market, the simple fact is that the official numbers do not agree. It should also be noted that Legere has been noticeably silent following these latest quarterly results, likely due to the fact that his bold and public rant has made him look like quite the fool.

Of course Legere’s initial complaint about Sprint is that the company padded its subscriber numbers by including inactive customers, ones who may actually be on another carrier but still appear in the company’s database. If that charge proves true, well T-Mobile has been ahead of Sprint for several quarters already and this entire debate is moot.

But even if Sprint is basking in the limelight of retaining third place, it could all be for not, as the overall loss of postpaid subscribers (the valuable long term contract kind) means that despite the company’s subscriber gains it continues to lose money…and fast.

As CNET’s Marguerite Reardon explains, “Sprint reported that its revenue fell 6.7 percent to $8.28 billion from $8.88 billion in the same quarter a year ago as it aggressively cut prices to attract new customers. Its losses also widened to $224 million, or 6 cents per share. This compares with a loss of $151 million, or 4 cents per share, in the same quarter last year.”

Not only that, but analysts are concerned about how quickly Sprint is burning up its cash reserves, as the company spent almost a billion of its $3.5 billion stockpile this quarter, meaning at that pace it’ll be out of cash by the end of the year. “Sprint is to be lauded for the improvement in subscriber trends,” said Craig Moffett, an analyst with Moffett/Nathanson Research. “But we fear it may be for naught. When a company is running out of cash, everything else is secondary.”

So even if T-Mobile’s Legere has to eat his words this quarter, he may truly get the last laugh as he watches Sprint fade into obscurity.

Did you like this post ? TheTelecomBlog.com publishes daily news, editorial, thoughts, and controversial opinion – you can subscribe by: RSS (click here), or email (click here).

Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

Comments on this entry are closed.

Previous post:

Next post: