Reuters: Price War in U.S. Mobile Market Raises Fear of Profit Hemorrhage

The feud between the mobile carriers is starting to worry the members of Wall Street, convincing them that the industry’s profits could seriously decline. T-Mobile started their Uncarrier plan months ago in an attempt to gain customers, enticing them to leave their current carrier and switch to T-Mobile. AT&T finally made a move to attract customers by paying them to switch from T-Mobile. Sprint followed suit saying it would provide big discounts for family and friend groups. Then T-Mobile hit back say they would pay the high exit costs for customers switching to T-Mobile. According to Reuters, “While discounts are always welcomed by consumers, the intensifying competition is a new challenge to a U.S. industry long used to imposing its will on consumers, and analysts fear it could result in the loss of billions of dollars of revenue.” Investors had hoped AT&T and market leader Verizon Wireless would be able to shrug off T-Mobile’s moves, since they already control about two-thirds of the market. Competition could escalate further later on this year when Sprint, which is 80 percent-owned by Japan’s SoftBank Corp, is expected to try hard to woo back customers who have left because of technical problems from a network overhaul. Some investors are still hoping for a ceasefire if SoftBank’s hopes of merging Sprint with T-Mobile come to fruition. (Source: Reuters)