Sprint at risk of losing position as No. 3 wireless company

How long can Sprint Corp. hang on to No. 3? We’ll know soon.

Fast-growing T-Mobile US Inc. threatens to surpass the Overland Park wireless carrier in total subscribers when each reports its March 31 quarterly totals in a few weeks.

Fewer than 1 million subscribers separated the rivals at the end of December, when they last checked in. Sprint’s 55.929 million topped T-Mobile’s 55.018 million.

Analysts agree that, since then, T-Mobile has added more customers than Sprint. But has it grown enough to become the new No. 3?

“T-Mobile, on our numbers, is larger,” said Adam Ilkowitz, a Wall Street analyst at Nomura Securities.

Not so, says fellow analyst Craig Moffett at MoffettNathanson Research. His estimate of the rates at which each company’s subscriber list is growing puts T-Mobile behind Sprint until about the end of May.

Meanwhile, T-Mobile chief executive John Legere has claimed his company passed Sprint last year. Sprint chief executive Marcelo Claure has said he’s not worried about the flip.

Neither CEO was available to comment for this article, and each company balked at discussing first-quarter results ahead of the official disclosures.

Sprint executive Jaime Jones on Monday called the ranking “immaterial” in the turnaround plan of Claure, who became CEO last August. He said customers and employees aren’t asking about it.

The focus is on “winning in the long-term and not really worrying or being concerned about whether we’re No. 3 or 4 in the short term,” Jones said.

A T-Mobile spokeswoman declined to comment, referring to Legere’s previous comments.

Confirmation that T-Mobile has claimed the No. 3 spot would deliver a symbolic blow to Sprint, which clearly has been trying to grow.

Instead, the company’s subscriber count has treaded water more or less since mid-2012 despite sponsorship of the NASCAR Sprint Cup, commercials that touted its unlimited data plan, ads with NBA star Kevin Durant and a talking hamster as head of the Frobinson Framily.

T-Mobile has been closing the gap and grew by about 12 million subscribers in the last two years. Estimates from some analysts show T-Mobile’s growth in the first three months put it ahead of Sprint.

For example, Jefferies analyst Mike McCormack estimated T-Mobile grew by 2.15 million subscribers in the first quarter, much more than the 397,000 customer gains he estimated for Sprint. The pace would mean that T-Mobile passed Sprint in total subscribers around Feb. 16.

Ilkowitz sees less growth than McCormack for T-Mobile, 1.7 million additional subscribers in the first three months of this year compared with 468,000 at Sprint. Based on his estimates, T-Mobile still passed Sprint but at a slower pace, needing until March 8 to take the lead.

Moffett sees the first-quarter race as tighter still: 1,361,000 adds for T-Mobile, 814,000 for Sprint. In his view, the companies’ subscriber counts had not crossed by the end of March.

Claiming the No. 3 spot obviously means something to T-Mobile management. Legere boasted last summer that the switch would come by the time revelers greeted 2015.

More recently, Legere has asked for something of a recount.

Sprint’s year-end total, he told analysts in February, counted 1.7 million subscribers whose accounts had been inactive — and producing no revenue — for six months. He said the “industry standard” would cull these inactive names from the roster in 60 to 90 days.

Sprint’s number does include those 1.7 million inactive accounts. It has used a six-month threshold in its public filings since September 2010.

Legere closed his comments on the matter by saying T-Mobile by any count will be larger “by the next quarter or two.”

Assuming T-Mobile’s victory comes, it will be somewhat hollow in the larger scheme of things.

“Fighting for third place is not all that meaningful,” said Jan Dawson, an industry analyst at Jackdaw Research.

Verizon and AT&T dominate the cellular world with more than 110 million subscribers each, more resources and more network reach than Sprint or T-Mobile. The “duopoly” was a key motive behind Sprint’s aborted push to merge with T-Mobile last year. That deal died when regulators made it clear they saw competition among four carriers as a better deal for consumers.

And they are competing.

Since taking charge last August, Sprint chief executive Marcelo Claure has unleashed a flurry of promotions to attract new customers.

Sprint’s half-off deal, which Claure personally launched at a Leawood store in early December, continues. Other efforts — lifetime leases on the latest iPhone or a free Galaxy S6 lease on unlimited data plans — similarly push for new customers.

It’s pretty much what T-Mobile has done in a more branded way with its Uncarrier promotions, but for much longer.

“T-Mobile is about a year and a half ahead of what Sprint’s dealing with,” said Bill Ho, with 556 Ventures LLC.

And Sprint, Moffett said, still needs to show it can hang on to customers if it is to grow. Notably, he said, existing subscribers who didn’t come in under the recent promotions can find better deals elsewhere.

“They’re doing a better job getting customers in at the top of the funnel, but they’re going to have to plug the hole at the bottom,” Moffett said.

This story was originally published April 6, 2015 at 7:00 PM with the headline "Sprint at risk of losing position as No. 3 wireless company."