These two lines may never cross again
When Sprint finally put an end to its pursuit of T-Mobile last week, and subsequently fired long-time CEO Dan Hesse, the resulting stock market reaction exemplified the pileup of mistakes that the carrier has made. It also showed how Sprint now differs as an organization from that of its magenta competitor — to say nothing of the red and blue carrier variants far above it on the totem pole.
With T-Mobile's industry-changing moves set in motion years ago and finally bearing fruit today, coinciding nicely with Sprint's slow and painful collapse, it looks as though the nation's third and fourth-place carriers are about to swap positions — and I'd venture to say it's going to be a permanent switch.
Long-running talks of Sprint planning to buy out its closest competitor, T-Mobile, have kept the two carriers in the same sentences and comparisons for a good year now. It has always been "there's AT&T and Verizon up here, then T-Mobile and Sprint down there," but following the official word from Sprint that it is ready to go at things alone, again, the reality is that Sprint may be in a league of its own — and not in a good way.
Looking at one metric for the success of a company, its stock price, it's interesting to see how T-Mobile and Sprint have moved together in near lockstep over the last year — but particularly the last six months. It's clear now after the deal is dead that this stock price correlation was uniquely tied to the deal itself rather than their true competitiveness as carriers, as the deal ending sent them in different directions.
The end result, factoring in the past week of losses after the deal was called off, is Sprint down over 30 percent in the last six months — 40 percent off its high of the period — while T-Mobile is down a mild five percent. Hardly the lockstep movement of the past year.
When you start to compare the four major U.S. carriers over the same time period, it becomes clear to me that T-Mobile is more on the trajectory of the big two above it than Sprint, which is decidedly headed below it.
Three carriers on the rise, and one on the decline — shown off in an even more dramatic fashion if we back up the stock prices of these four companies to the one year ago mark.
Bringing in the big and stable AT&T and Verizon should give us an idea if there were any external factors hitting the wireless industry as a whole. Looking at this chart, it's clear to see that it's not so much a two-and-two situation, but more of three-and-one. AT&T, Verizon and T-mobile are holding steady, while Sprint is falling off a cliff.
Get out of here, scary charts I don't understand
I know, I know, there's more to this equation than simply looking at stock price charts. But what's most interesting is that they tell the story so succinctly that you could try to explain in many different ways and come to the same conclusion.
AT&T and Verizon are slowly lumbering their way along, adding customers at a smooth clip with little change, while T-Mobile is playing a bit more volatile role as the "Uncarrier," offering up some questions about its long-term growth rate but seeing dramatic customer gains in the past year. But then there's Sprint, losing customers every year, lagging behind in network rollout and not doing a whole lot with its plan structure or prices to entice anyone to stay, let alone join, the network.
T-Mobile crossed the mark to 50 million subscribers as of last quarter, and the Uncarrier is poised to overtake Sprint in customers by the end of the year. At the rate of growth T-Mobile seems to be able to sustain, I certainly don't think that those lines will ever cross again so long as Sprint and T-Mobile are independent of one another.
The changes that we're seeing now in T-Mobile were put into motion years ago following the failed buyout by AT&T, and if Sprint at all intends to turn things around in the coming years itself, it has to start laying that groundwork now.
It's caught relatively flat-footed, though, and new CEO Marcelo Claure is simply hired from inside Sprint's own ranks — Claure was on the Sprint board, and his company Brightstar is owned by Sprint's parent SoftBank. That doesn't seem like the most positive move to make, when Sprint doesn't just need to stop this slide, it needs to be adding customers again at the rate of about 250,000 per quarter if it wants to stay ahead of T-Mobile.
Chances are that T-Mobile will become the third-largest carrier in the U.S. for the first time in its history this year, and I don't think that it'll be looking back at Sprint and feeling sorry one bit.