A \Free\ T-Mobile Represents Worst Case Scenario for Sprint
Published on: 5th Aug 2014
Note -- this news article is more than a year old.
Iliad's surprise bid for T Mobile would leave Sprint the least able to compete if wireless prices tumble, according to Strategy Analytics. While Strategy Analytics believes the bid will ultimately fail, it represents a wake up call for all the carriers in the increasingly saturated market.
Susan Welsh de Grimaldo, Director, Wireless Operator Strategies said: "While T-Mobile's UnCarrier strategy has elevated its market position, its Q2 performance trailed AT&T's and its transformation has been more about offering customer choice and flexibility rather than lower prices. Iliad's Free strategy is all about the price. Pushing multi-play bundles would be an obvious response for Verizon and AT&T to the Free approach, a strategy which has enjoyed some success in France, but that is currently not an option for Sprint."
Key findings from the report:
· Iliad's Free has had a dramatic impact on the French market, driving a 29% decline in service revenue and 19% decline in EBITDA since its launch;
· Iliad's founder, Xavier Niel, is also an investor in Israel's Golan Telecom, who's aggressive mobile launch two years' ago has had an equally dramatic impact on the market;
· Despite good logic to a bid by an operator keen to play outside the contracting European market, Iliad is unlikely to have an appetite for a bidding war with Softbank.
Phil Kendall, Executive Director, Wireless Operator Strategies, commented: "Perhaps more fundamentally, a successful Iliad bid would force the operators to move away from battles based on network coverage, speed, and pricing, and focus on effective marketing strategies built on segmentation. But irrespective of T-Mobile's ownership, this is a wake-up call for operators to get ahead of the game: differentiated products targeted at specific market needs by segment are the key to success when pricing, network quality and product features are all ultimately replicable."