T-Mobile USA Moves Up

The Perpetual Number Four Becomes the Number Three

Sprint and T-Mobile USA have spent 10 years competing for the number-three spot in America’s wireless market. T-Mobile had been chipping away at Sprint’s lead, but Sprint’s acquisition of Nextel in 2005 nearly doubled the operator’s market share to 21 percent, leaving T-Mobile far behind.

Last quarter, T-Mobile finally surpassed Sprint’s subscriber base thanks to a strategy of organic growth. T-Mobile reported nearly 59 million subscribers at the end of 2Q15, while Sprint had about 58 million.

However, Sprint and T-Mobile remain far behind AT&T’s 122 million subscribers and Verizon’s 108 million.

T-Mobile’s underdog Un-carrier attitude has energized the company to become the market’s force for change, with the near elimination of phone subsidies, contracts and termination fees. T-Mobile CEO John Legere said on the company’s earnings call that it has “enjoyed positive porting from all carriers for six quarters in a row”. The operator’s campaigns attracted 760,000 branded post-paid phone subscribers in 2Q15, while AT&T and Sprint lost post-paid customers and Verizon gained only 321,000.

The question is whether T-Mobile can continue in its role as a disruptor, particularly since it’s officially reached the ranks of a top-three player. T-Mobile USA had been an acquisition target of AT&T and Sprint, and its ability to grow further could require a mixture of services. AT&T and Verizon can offer complex multiplay packages that include access and content.

T-Mobile may face difficulties in challenging the law of large numbers. Its subscriber market share, now at about 17 percent, has nearly doubled in the past 10 years. It would be all but impossible to double it again over the coming decade, especially as AT&T and Verizon learn to respond to T-Mobile’s strategies and Sprint finds itself in a new challenger position.

The new rankings for the US operators go to show that all things can change. The region had appeared to have settled into a three-horse race since 2005, with AT&T, Verizon and Sprint consistently commanding a total of 90 percent of the market. More big switches can be expected as telecom operators continue to adjust their offerings to suit consumer demand. Change is in the air.

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