Sprint Corp Is a Deal for Customers, But S Stock Is a Dud | InvestorPlace

The company is offering a year of unlimited wireless service to new customers. Anyone with a competitor’s smart phone can get unlimited texting, calls, and data if they switch to Sprint. The pitch is aimed at Verizon Communications Inc. (NYSE:VZ) customers but it’s likely to cause fallout across the whole sector.

If stock prices are any guide, Sprint’s pricing strategy is indeed raising investor concerns. VZ stock has slumped, off 23% from last July’s highs. AT&T Inc. (NYSE:T) has hardly fared better; its shares have dropped 15% since March and sit near 52-week lows.

Pricing War Could Intensify Weakness
One of the issues for Sprint is that there are no guarantees that the FTC would approve a tie-up with T-Mobile, as it would merge the country’s #3 and #4 mobile carriers. The pro-merger argument says that neither T-Mobile nor Sprint is all that strong in comparison to AT&T or Verizon, and thus the market would benefit from having a more durable #3 competitor. However, T-Mobile’s has excelled in recent years. The argument that it can’t compete against the big dogs on its own isn’t convincing.

Sprint could argue that it is too financially weak to survive on its own. But its actions, particularly in instigating a brutal price war with Verizon, speak to a company that is still capable of bringing a competitive fight. Given that the FTC prefers lower prices and more competition within industries, why would they want an aggressive Sprint that is already shaking up pricing to be swallowed up by a competitor?

Read complete article here:

Sprint Corp Is a Deal for Customers, But S Stock Is a Dud | InvestorPlace.