have called off merger plans, T-Mobile's outspoken CEO John
Legere has made it very clear he sees his one-time potential
partner as the next target to take down.
The chief executive, who never tires of tweaking his
used the social media site to share his goal for T-Mobile, which
is to overtake Sprint and become the No. 3 wireless carrier in
Legere punctuated his tweets with the hashtag #OvertakeSprint.
The tweet below is one of many using that tag Legere has posted,
but it's typical of his sentiment.
- John Legere (@JohnLegere)
August 7, 2014
Legere may be a bit of a blowhard, but his company has been
rising steadily while Sprint has moved mostly in the opposite
direction. Not merging may make Legere's goal of catching up to
wireless phone leaders
a distant dream, but passing Sprint is not only possible, it's
Where do the two companies stand?
In terms of subscribers, T-Mobile had
more than 50 million
at the end of the second quarter, up from 44 million a year
earlier. Sprint had
54 million subscribers
at the end of the second quarter. The key difference is
that T-Mobile has added more than 1 million new subscribers in
each of the past five quarters, while Sprint's user base has
grown anemically -- or declined -- in most quarters. In the
second quarter of 2014, Sprint lost 220,000 subscribers. The
company posted a slight gain in 2013. However, Sprint has had
success with its Framily plan, and it may be turning a
Why is T-Mobile Gaining?
Legere may be full of bluster, but his company has backed that
swagger with lower prices, more transparent billing, and constant
innovation. T-Mobile's "Un-Carrier" strategy brands the company
as being different than its competitors. When your industry is
disliked by the public, that's a sound plan.
But it hasn't been all talk on T-Mobile's part. Legere has
simplified billing while making radical moves like offering
streaming music that does not count against data caps. He also
has T-Mobile paying early termination fees for customers fleeing
another carrier, which removes a major barrier to entry.
While Sprint has had some success with its Framily Plan -- an
offering that delivers lower prices if friends and family join
along with you -- it's overly complicated compared to how
T-Mobile prices its offerings. In an industry where surcharges
and mysterious costs are the norm, Legere has eliminated data
overages and made every effort to not offer complicated pricing
schemes -- which Framily certainly is.
Legere calls out his competitors in an industry that has
always operated under an implied collusion. This has forced lower
prices across all carriers and sent customers flocking to
Can Sprint turn it around?
Sprint Chairman Masayoshi Son did not hide the fact that one of
the reasons he pursued a merger with T-Mobile was that he wanted
Legere to run the combined company. He never expressed similar
affection for Sprint CEO Dan Hesse, and as soon as the merger
fell apart, Son replaced Hesse with Marcelo Claure -- an
outspoken leader who has been compared to Legere. Claure may
be the right man for the job, taking over at a time when the
worst is behind Sprint and the failings of AT&T and Verizon
leave plenty of room for two competing upstarts.
The Sprint chairman praised Claure's "management experience,
passion, and drive to create the strongest network and offer the
best products and services in the wireless industry."
Though he praised Hesse for his leadership as he booted him
out the door, the statement was clear: If Sprint can't buy
T-Mobile, it needs a leader who can fight bluster with
Will T-Mobile overtake Sprint?
While the worst may be behind Sprint, it needs more than Framily
to slow T-Mobile's momentum or gain much of its own. But with 4
million subscribers between the two, simply having a quarter
where it doesn't lose customers would go a long way toward
keeping Sprint at No. 3.
In the short-term, T-Mobile should keep gaining. But it's
unlikely to make up 4 million subscribers in the next quarter.
T-Mobile added 4.4 million subscribers in 2013, while Sprint
gained about a half million. If those numbers hold steady for the
next 12 months, then the two companies would be essentially tied.
It seems likely that T-Mobile will keep moving forward at a
similar pace, since its growth has been steady for almost two
What will happen with Sprint is a wild card. Past results have
been bleak, but a new CEO and any momentum built up around
Framily could help it hold off T-Mobile for the next year.
Legere, however, is unlikely to stand pat. While his past
efforts have mostly focused on winning customers from AT&T
and Verizon, if he specifically targets Sprint -- as he appears
willing to do -- he may be able to move the numbers by adding
customers at Sprint's expense. It's hard to bet against Legere,
given his track record. At some point, it seems likely that
T-Mobile will become the No. 3 wireless carrier in the U.S.,
but Claure still has time to stop that from happening.
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Will T-Mobile Overtake Sprint?
originally appeared on Fool.com.
has no position in any stocks mentioned. He is a reluctant Sprint
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