Competition in the U.S. wireless market is likely to remain “relatively rational” even through the typically cutthroat holiday season, according to Barclays Equity Research.
Barclays hosted its Global Technology, Media and Telecommunications Conference last week in San Francisco, and summarized the event in a research note distributed to investors this morning. While the holiday shopping season has typically become a feeding frenzy as carriers seek to grow their market share, the market remains relatively calm as operators focus on maximizing profits rather than expanding their overall customer base, Amir Rozwadowski observed.
“Commentary by AT&T, Verizon and Sprint all reiterated that the competitive landscape remains subdued with just three weeks of the holiday promotional season remaining,” Rozwadowski wrote. “However, our view, promotional activity is likely to remain relatively rational given several dynamics.”
T-Mobile and Sprint have roiled the U.S. market in recent years with aggressive promotions seeking to poach customers from Verizon and AT&T, which remain the two largest carriers in the nation. But T-Mobile has eased up on its campaigns as it narrowed the subscriber gap with its bigger rivals, and Sprint has become increasingly focused on regaining its financial footing rather simply growing market share.
“While we believe that Sprint will still position itself as the price leader, management expressed a renewed focus on balancing customer acquisition costs with supporting the company’s cash flow equation through the generation of attractive customer lifetime values,” Rozwadowski wrote. “As we’ve previously highlighted, the carrier has flagged plans to increase prices further in 2018, with management reiterating that the double-digit price erosion that has occurred over the past year is not sustainable. Furthermore, we believe that certain carriers may feel less incentivized to discount phones as the importance of network quality becomes more relevant as consumers move to higher-end devices.”