What Sprint's Upcoming Price War Means for Your Wireless Bill

Who says you can't teach an old dog new tricks?Looking back at third-place telecom giant Sprint( S ) , it's truly remarkable just how far the company has come in the span of three years.

Rewind to late 2012 and early 2013, and Sprint appeared to be on death's doorstep.

Source: Sprint

The company was hemorrhaging money, its stock price had fallen by more than 50% from just six months prior, and a once-promising multibillion-dollar investment had transformed into a massive financial headache for Sprint.

Fast-forward to the present, and today's Sprint has gained an entirely new lease on life, thanks in no small part to the timely cash infusion from now-majority investor Softbank . As a result, Sprint has signaled its intention to take on industry heavyweights AT&T and Verizon Communications in the months ahead, and consumers should be paying attention.

Sprint reaches a turning point

As the result of a number of factors, Sprint plans to cut prices in hopes of stealing customers from the likes of AT&T and Verizon Communications. And while Sprint has remained tight-lipped in the way of details, this should undoubtedly prove a win for U.S. wireless consumers.

So, where does Sprint's newly found financial flexibility come from?

Several places, actually. For starters, Sprint recent abandoned its attempted $32 billion merger with the nation's fourth-largest telecom company, T-Mobile , which gives it additional short-term financial flexibility that it originally hadn't expected. Beyond the scrapped T-Mobile deal, Sprint also expects to conclude the rollout of its Network Vision LTE network investment program as well, although many agree Sprint's network will still require some degree of ongoing investment over the long term. Combine these two factors with the willingness to lose money in the short term in order to gain customers, and Sprint could present a formidable challenger to AT&T and Verizon.

What this means for consumers

The tried-and-true maxim "when companies compete on price, consumers win" should certainly apply here for U.S. telecom subscribers.

Renewed competition has been one of the primary themes we've seen at work in the U.S. telecom space over the past 12 months or so. T-Mobile, under the outspoken leadership of Jon Legere, has aggressively attacked the likes of Verizon and especially AT&T with its Uncarrier campaigns. Now with Sprint apparently taking a similar tactic, the pricing competition should only increase.

We've already seen T-Mobile's tactics bear some fruit in terms of driving positive change for the consumer. In early 2013 T-Mobile officially introduced its Uncarrier plan, and ever since it has been a major agent of change across the industry. AT&T, Verizon, and Sprint have all responded in their own various ways over the past year or so, but the point that T-Mobile's boldly competitive action has driven down prices for consumers for at least some plans for U.S. wireless consumers is beyond question. T-Mobile appears poised to continue to push the envelope--just last month, it announced a still-cheaper update to its Uncarrier plan. And with Sprint entering the fray, expect competition to increase and prices to fall, all to the consumer's benefit.

Masayoshi Son. Source: Softbank.

Sprint Chairman and CEO of its majority-owner Softbank Masayoshi Son is famous for this competitive drive. He built Softbank from a struggling Japanese telecom player into an industry power through a mix of aggressive pricing, savvy marketing, and customer service. Son recently installed Marcelo Claure as Sprint's CEO, another rags-to-riches billionaire who built his own business empire from nothing before selling it to Softbank. Under their combined guidance, expect Sprint to go on the offensive in short order.

So, while we'll have to wait to find out exactly what Sprint has up its sleeves in terms of its own price-cutting strategy, we've seen in the past that this kind of behavior means more savings for consumers. Take it to the bank: Change is coming to the U.S. wireless industry. And that's certainly cause for celebration for the average consumer.

Leaked: Apple's next smart device (warning, it may shock you)

Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early, in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here !

The article What Sprint's Upcoming Price War Means for Your Wireless Bill originally appeared on

Andrew Tonner has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Other Topics


Latest Markets Videos

    The Motley Fool

    Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

    Learn More