Ina Fried

Recent Posts by Ina Fried

T-Mobile US Makes Gains, but Still Seen as Acquisition Target

With the U.S. cellular market nearly saturated, the battle among carriers for existing customers is intensifying. Meanwhile, the middle tier of the market is rapidly disappearing.

Screen Shot 2013-08-13 at 9.17.33 AM

A wave of consolidation began with AT&T’s attempt to buy T-Mobile. That deal failed, but since then, T-Mobile bought MetroPCS, and AT&T is in the process of trying to buy Leap. Sprint has acquired Clearwire and sold a majority stake to SoftBank.

“With this merger behind, all eyes are squarely focused on T-Mobile as to who makes the bid for [the] fourth-ranked operator in the next 6-12 months,” analyst Chetan Sharma said in a report released on Tuesday.

The bullseye on T-Mobile’s chest comes despite the significant gains it made in its customer base last quarter.

“The story of the quarter was the resurgence of T-Mobile which roared back with an industry-leading net-add quarter, something it did last when George Bush was still the president,” Sharma said in the report. The gains included absorbing MetroPCS, of course, but also a big rise in traditional postpaid customers, something Sharma noted hasn’t happened in more than three years. And, as Sharma noted, the gains came at the expense of both profit margins and average revenue per customer.

The battle on the handset side is also showing similar carnage as the growth of new customers slows and the smartphone market gets further divided between the haves (Apple and Samsung) and the have-nots (everyone else).

“BlackBerry, Nokia, HTC, each once-proud leader of the smartphone ecosystem is struggling,” Sharma said, and comebacks are tough in the phone business.

“In this market, you don’t get too many chances and too many years to turn the ship around,” he said. “Once the customer loyalty is lost, it is very hard to get it back because there are hungry competitors ready to take your spot.”

Both BlackBerry and Nokia are likely to be gobbled up by another company with aspirations to the upper echelon of the phone business. BlackBerry said on Monday that it is considering various options, including selling itself.

“Lenovo is the dark horse of mobile and while there are others like HP and Sony who are looking to reenergize the market, and Huawei and ZTE inching-up every quarter, Lenovo seems better positioned to make an acquisition and make a run for the top 3 spot,” Sharma said.


Latest Video

View all videos »

Search »

There’s a lot of attention and PR around Marissa, but their product lineup just kind of blows.

— Om Malik on Bloomberg TV, talking about Yahoo, the September issue of Vogue Magazine, and our overdependence on Google