As the third quarter closes and carriers prepare to report quarterly financials later this month, one analyst firm believes that T-Mobile and Sprint are headed in decidedly opposite directions.
Specifically, the analysts at Wells Fargo said they expect T-Mobile to gain more customers than they initially expected during the third quarter—numbers that would represent continued momentum for the operator in the industry.
However, the Wells Fargo analysts predicted that Sprint will report an overall decline in its customer base.
“While we have seen more rational behavior of late, during the September quarter all Big 4 wireless carriers were aggressive with device offers, including BOGO on the newly launched iPhones,” the analysts wrote in a note to investors this week. “For Sprint, we are lowering our postpay gross adds estimate to flat sequentially and keeping our postpay churn estimate unchanged (1.68% vs. 1.59% y/y), which results in postpay phone net losses of -10K (vs. +146K prior), and tablet losses of -80K being offset by +80K gain in other.”
That prediction flies directly against the analysts’ outlook for T-Mobile in Q3: “We are raising our Q3 postpaid phone net add estimate to 611K (vs. 537K prior) and our total postpaid net add estimate to 854K (vs. 790K prior),” they wrote. “TMUS has noted it expects solid traction in getting customers to upgrade to the new iPhones, particularly as these devices are 600MHz compatible (the first iPhone to be!).”
Those predictions follow actions by all of the nation's wireless operators, including Sprint and T-Mobile, to adjust their unlimited service pricing in recent months. Sprint in particular raised its prices several times.
T-Mobile and Sprint, of course, are locked together in a merger proposal that the companies hope to consummate early next year. Analysts generally believe regulators from the FCC and Department of Justice will bless the union, albeit with potential divestitures and conditions.
Indeed, part of the companies’ merger argument is that Sprint in particular won’t be able to compete on a national level without combining operations with T-Mobile. Sprint essentially reiterated that argument last week in a lengthy filing the company with the FCC. That filing echoed many of the points the company brought up in June about its tenuous position in the marketplace and how it doesn’t believe it will be able to compete against market heavyweights like AT&T and Verizon.
T-Mobile, for its part, continues to enjoy significant momentum in the wireless industry, largely due to its “uncarrier” marketing paired with aggressive promotions like free Netflix service and free international roaming. Further, T-Mobile is widely expected to launch some type of TV service in November based on technology it purchased late last year from Layer3 TV.