Plenty of people seem happy that Sprint has decided to nix its merger with T-Mobile and now we have yet another reason to celebrate the ill-fated deal’s demise: It could spark an even bigger mobile price war. Reuters, via CNBC, reports that Wall Street analysts are fretting that the collapsed merger is going to lead to more intense competition between the major wireless carriers, which will mean lower prices for consumers and lower profit margins for the wireless providers. Heaven forbid!
“Without the ability to compete on scale they are going to have to compete on price, so the two smaller competitors may become increasingly desperate to maintain market share and could become irrational in pricing, which could cause disruptions in pricing in the industry,” Moody’s analyst Mark Stodden tells Reuters.
“Sprint could take the same road and try to compete more aggressively on price, which could have the effect of restarting subscriber growth,” explained ITG Investment Research analyst Matthew Goodman.
Wall Street always cries every time the wireless industry starts behaving more competitively because it means that those companies are less likely to shell out cash on higher dividends and pricey stock buybacks. But the Street’s loss is the average consumer’s gain, since we’ll soon have not just one but two carriers aggressively trying to pick up subscribers with better deals and lower prices.
Even better, Reuters points out that Sprint has finally, finally been plunging a lot of resources into its objectively subpar wireless network and that it should start delivering real improvements to its customers sometime next year. Sprint has long had an enormous amount of spectrum but so far hasn’t used it effectively. If Sprint can get its network up to speed soon while also doing well at next year’s 600MHz auction, it could finally become a legitimate competitor again.
All of this is yet another reason to celebrate Sprint’s failed attempt to buy out T-Mobile.