Friday, February 21, 2014

T-Mobile US Attack Will Fail, Analysts Say

Will T-Mobile US or Sprint be able to make a dent in U.S. mobile market share? It might be a significant question U.S. regulators and antitrust authorities might have to ponder, if Sprint decides to make an acquisition move on T-Mobile US.

In the span of three recent quarters, for example, T-Mobile US gained two million new accounts, which suggests to some observers that T-Mobile US can attack U.S. market structure, and that Sprint might have a chance to do the same.

In that regard, at least one communications analyst firm believes that T-Mobile US will not change industry market share in 2014, no matter what it does. That does not address the issue of whether T-Mobile US can significantly change U.S. mobile market share over the longer term.

But neither does the prediction suggest T-Mobile US or Sprint can prevail, over the longer term, in a protracted price war against Verizon Wireless and AT&T Mobility.

"Despite the price war, we do not anticipate any major shifts in market positioning among the top four carriers in 2014, says Susan Welsh de Grimaldo, Strategy Analytics research director.

But Strategy Analytics is not more optimistic over the medium term, either. T-Mobile US will struggle to stay near 11 percent of the retail market, while Sprint will gain a percent to
reach 15.5 percent by 2018 and the two leaders remain on top with Verizon Wireless at 33 percent and AT&T Mobility just under 25 percent.

The implications for policymakers might be clear enough: if Strategy Analytics is right, neither Sprint nor T-Mobile US will be able, on their own, to change U.S. market structure.

That might not matter, in terms of competitive dynamics, if Sprint and T-Mobile US can exert pressure on the two market leaders with 58 percent share.

But some might argue that 58 percent will be more significant than might at first appear, since the two leading service providers are likely to have the lion’s share of the most lucrative accounts (multi-line, postpaid, smartphone-using shared accounts).

T-Mobile US will take nearly 16 percent of retail gross adds in 2014, about the same as Sprint will achieve. But T-Mobile US also will experience levels of customer churn that result in net gains of about nine percent, compared to Verizon Wireless net gains of 47 percent, on 22 percent gross adds.

The Strategy Analytics prediction suggests there is almost no chance the T-Mobile US attack will succeed, leaving the U.S. mobile market in a situation where a functional duopoly, which most believe will not be good for innovation and competition, will prevail.

No comments:

U.S. Streaming Spending Flat Last 3 Years, But Change Coming?

Most would agree the subscription video business now is unstable, with major changes looming. On the other other hand, consumers tend to o...