Sprint, the third-largest player in the US mobile market, has abandoned its bid to acquire T-Mobile USA, the fourth-largest player in the market, and has hired a new CEO. These factors will intensify competition in the US as Sprint battles with T-Mobile to lure subscribers from market leaders Verizon and AT&T.
Following widespread reports that Sprint has finally bowed to regulatory resistance and abandoned its attempt to acquire T-Mobile USA, the number-three mobile operator in the US unveiled a new CEO, Marcelo Claure, who is likely to pursue a more aggressive strategy than his predecessor, Dan Hesse.
Claure founded mobile distributor Brightstar and built it into a multibillion-dollar business before selling 57% to Softbank, which also owns Sprint, in October 2013. That transaction led Claure to join the board of Sprint in early 2014. In August, Claure took over as CEO of Sprint and stepped down from Brightstar as Softbank announced plans to acquire the remaining 43% of the company. That transaction will make Claure, 43, a billionaire.
More importantly, Claure has a reputation as an aggressive and charismatic leader who might have what it takes to revive Sprint’s fortunes in the US mobile market. Priority one will be to help Sprint compete with T-Mobile, which has seen its market share rebound after launching a host of price and other initiatives as part of its well-publicized “Un-carrier” strategy.
Sprint’s first major move under Claure was to unveil the Sprint Family Share Pack, which lets customers who switch to Sprint have up to 10 wireless lines sharing 20GB of data for $100 a month. Sprint says the plan offers twice the value of any other on the market, given that T-Mobile offers up to four wireless lines sharing 10GB of data for the same price.
Ovum research shows that the US mobile market is in good health, with ARPU increasing by 1.4% in 2013, to $47.56, and with overall revenues increasing 5%, to $226 billion. However, as of mid-2014 there were signs of trouble, with T-Mobile’s aggressive pricing already having an impact on profitability.
Given that context, what will happen now that Sprint has joined the pricing fray? Will there be an all-out price war in the US mobile market? Tune in to our next US update to find out!
Mike Roberts is practice leader for North and South America at Ovum. For more information, visit www.ovum.com/