Telecom & Wireless
Sprint Destroys T-Mobile in Stock Market
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T-Mobile US Inc. (NASDAQ: TMUS) is supposed to be much better than Sprint Corp. (NYSE: S), both in customer additions and financial performance. T-Mobile CEO and President John Legere, the most talkative chief executive in America, reminds the public of those things over and over again. He neglects to mention his share price. Since the start of the year, it is up 20% to Sprint’s 66%. Investors are less impressed with Legere than he is of himself.
According to USA Today, the fight between the CEOs of the carriers has stepped up:
Sprint and T-Mobile, already in fierce competition to grab market share from the two biggest telecom companies, took their rivalry to a new level Thursday: both will now focus on wireless plans with unlimited data for a set monthly fee.
The separate announcements, coming within minutes of each other and accompanied by now familiar sparring between both companies’ CEOs, raise the stakes for the other carriers to follow suit, as they have with cutting data overages and eliminating two-year cell-phone contracts.
There is some chance Legere’s is not the better of the two.
Sprint was helped by its latest quarterly results, which showed it added 173,000 net postpaid (contract) subscribers. Those who left Sprint for dead were wrong. T-Mobile did better. It added 890,000 “branded postpaid” subscribers.
Part of the market’s lack of enthusiasm about T-Mobile is that Legere is not his own master. Deutsche Telekom CEO Timotheus Höttges is. There have been persistent rumors he might sell T-Mobile or find it a U.S. partner. He could also slow T-Mobile’s investment in its network. In other words, Wall Street has to take into account that T-Mobile’s plans are subject to change from outside of Legere’s control.
Of course, Sprint does not control its own fate either. It is majority owned by Japan’s SoftBank.
There are abundant reasons investors might favor one company over the other. For the time being, based on the market, Sprint is the winner.
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