Sprint vs. T-Mobile: Who Benefits and Who Loses Out?

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By Trey Thoelcke Published
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Wireless carriers Sprint Corp. (NYSE: S) and T-Mobile US Inc. (NYSE: TMUS) struggle neck and neck to dominate the second tier in the industry. Verizon Communications Inc. (NYSE: VZ) and AT&T Inc. (NYSE: T) dominate the number one and number two spots, respectively, while Sprint struggles to hold the third spot, with T-Mobile holding close at number four. Who benefits and who loses from this neck-and-neck struggle between Sprint and T-Mobile?

First and foremost, the customer ultimately benefits. Wireless phone service represents a commodity. On a basic level, one is just as good as the other. Sprint and T-Mobile can only win over customers by competing on price and service. Sprint customers definitely win on the pricing front. Sprint customers can get a plan for $90 per month on both the iPhone 6 and the Samsung Galaxy 6. T-Mobile customers pay more for their plans but make up for it in terms of service. T-Mobile customers get upgradeability options over the length of their contract.

While the customer ultimately benefits in the commoditized world of wireless, the shareholders of the less profitable company ultimately lose out. According to Morningstar, Sprint has not turned a profit since 2006. Moreover, the last time Sprint’s free cash flow resided in the positive range was 2011. T-Mobile fares better on the fundamentals front. It demonstrates consistency in maintaining net income. However, it also struggles to generate free cash flow. T-Mobile turned free cash flow deficits of $861 million and $3 billion in fiscal 2013 and 2014, respectively.

ALSO READ: RBC Gets More Positive on Wireless Carriers

T-Mobile’s tendency to show net income paid off for investors in the form of superior returns. Over the past five years, T-Mobile saw its shares advance 111%, compared with 93% for the S&P 500 as a whole. By contrast, Sprint shareholders suffered during that time, with shares advancing a mere 5%.

With that said, investors are better off with T-Mobile while the consumer is better off with Sprint.

Photo of Trey Thoelcke
About the Author Trey Thoelcke →

Trey has been an editor and author at 24/7 Wall St. for more than a decade, where he has published thousands of articles analyzing corporate earnings, dividend stocks, short interest, insider buying, private equity, and market trends. His comprehensive coverage spans the full spectrum of financial markets, from blue-chip stalwarts to emerging growth companies.

Beyond 24/7 Wall St., Trey has created and edited financial content for Benzinga and AOL's BloggingStocks, contributing additional hundreds of articles to the investment community. He previously oversaw the 24/7 Climate Insights site, managing editorial operations and content strategy, and currently oversees and creates content for My Investing News.

Trey's editorial expertise extends across multiple publishing environments. He served as production editor at Dearborn Financial Publishing and development editor at Kaplan, where he helped shape financial education materials. Earlier in his career, he worked as a writer-producer at SVE. His freelance editing portfolio includes work for prestigious clients such as Sage Publications, Rand McNally, the Institute for Supply Management, the American Library Association, Eggplant Literary Productions, and Spiegel.

Outside of financial journalism, Trey writes fiction and has been an active member of the writing community for years, overseeing a long-running critique group and moderating workshop sessions at regional conventions. He lives with his family in an old house in the Midwest.

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