Pacific Crest: 'We do not believe an overall price war is occurring'

Aggressive carrier promotions extended beyond the holidays into January, according to a research note from Pacific Crest Securities. And Sprint and T-Mobile appear to be maintaining that promotional momentum into February.

"While historically a slow month, January did exhibit some strategic promotional activity from the carriers," Pacific Crest said. "Unlimited data plans are taking the lead on the promotional side, and we do not believe an overall price war is occurring. Pricing changes by carriers should be viewed as strategic attempts to gain subscribers while their competitors' backs are turned."

Indeed, T-Mobile launched a Valentine's Day promotion that includes an extension of a tablet campaign it carried out last year, as TMoNews reports. The carrier is offering a free Alcatel OneTouch Pixi 7 to users who buy one on its equipment installment plan and activate it on a data plan of 1 GB per month or more. T-Mobile is also offering $50 off the iPad Air 2 and $40 off the Samsung Galaxy Core Prime and Samsung Galaxy Grand Prime.

Meanwhile, Sprint launched a promotion guaranteeing $200 off a new Samsung Galaxy S6 or Galaxy Note5 to new or existing users who trade in their current working smartphone. The offer is available in Sprint's retail stores and will be extended to its website and telesales channels by the end of the week, and can be combined with the carrier's offer to halve the rates of customers who switch from other operators.

The 50 percent off campaign continues to help Sprint grow its user base, Pacific Crest Securities said, but that growth has been costly.

"Our checks have found that Sprint's 50%-off promotion has maintained its momentum; however, we expect it will negatively impact ARPU. It remains to be seen what type of traffic Sprint will be able to maintain without a promotion, but we expect the carrier to take a slight pause in promotions following the 50%-off promotion's completion on Feb. 11. We expect the aggressiveness of Sprint's next promotion will be based on traffic trends absent promotions, which we will monitor closely."

For more:
- see this TMoNews report

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