Could Sprint Nextel Corporation (NYSE:S) be taking on competition, AT&T Inc. (NYSE:T) and Verizon Communications Inc. (NYSE:VZ)? It looks like that may be the case. After the results for the Sprint’s Q2 2012 earning were announced, their stocks soared by 20%. And although the net subscriber loss number for postpaid subscriptions was not that significant at 240,000, the increase in iPhone customers is important. There was 1.5 million new customers, which added 200,000 above the expectations. Also, the key profitability gauge of EBITDA, which came in at $1.3 billion, half a billion more than they originally anticipated.
When you compare these numbers to Verizon and AT&T, it gets interesting. Both companies had strong profits, but that was because they went lighter on the promotions for the iPhone.
This news is good for Sprint, as they had a rough year back in 2011. According to Tero Kuittinen, in a recent article for BGR, there are three factors that are contributing to the success of Sprint’s boost. Since the Nextel merger is approaching closure, Sprint can now halt their focus on iDen service and consolidate their subscriber base with it’s CDMA network. Though they are losing hundreds of thousands of iDen subscriptions every quarter, they’re also replacing those numbers with the same amount of CDMA subscribers.
Another benefit for Sprint, is the fact that T-Mobile is losing ground fast. After a failed attempt at merging with AT&T Inc. (NYSE:T), and a silly marketing campaign that apparently hasn’t done anything for them, it seems that T-Mobile is failing to make the sales they need to sustain their company.
The most likely reason for Nextel Corporation (NYSE:S)’s success? Verizon Communications Inc. (NYSE:VZ) and AT&T’s insatiable appetite for taking more money from the customers, while offering less in terms of products and services. Over the past few years, both cell phone carriers have dropped cheap texting plans and tiered pricing options, while forcing customers to pay for unlimited voice plans and high data plans. At least Sprint gives customers a choice to save more money. If the other mobile carrier companies want to stay in competition, maybe they need to take notes from Sprint.
Thanks to inflation, everything just keeps going up from gasoline, to food, to technology. More often than not, consumers are always looking for better deals, and they’re not afraid to ditch one company for another, if they think it will save them more money. Right now, AT&T and Verizon still dominate the postpaid carrier market, but given the ever changing nature of the technology market and shaky economy, that may change.
