Sprint Looks to Lure T-Mobile Customers with Incentives
Sprint, reportedly suggesting that AT&T and T-Mobile are far from a fairytale match, is offering to credit the early termination fee of anyone who wanting to switch over.Sprint is hoping to lure away T-Mobile customers who may be feeling uneasy about the prospect of their carrier being taken over by AT&T, should the larger carrier's $39 billion purchase bid get the thumbs up from federal regulators.
Until June 23, Sprint is offering a $175 early termination fee (ETF) credit to business customers who switch over, $125 to consumers who switch and buy a smartphone, and $75 to anyone who switches and opts for a feature phone, a Sprint spokesperson, Lloyd Karnes, confirmed to CNN Money. Tech site Spantechular first reported the deal, which has been in effect since May 4, according to Karnes. The site posted what it says is a leaked Sprint ad.
Karnes added, according to CNN, that the deal is open to subscribers switching from any carrier. Casting a bit of doubt that the ad is actually the work of Sprint's marketing team, however, there's an odd bit of language. At one point it reads: "If the acquisition does go through ... they're ours for life (or ETF applies if they choose to leave)." T-Mobile, seemingly also worried that its customers may jump ship, this week began cold-calling them to see if they're satisfied with their service.
AT&T is no doubt going to do its darndest to push the deal through. While early into the process AT&T revealed that it will pay T-Mobile parent company a $3 billion breakup fee for its troubles, should the deal fail to go through. "The breakup fee was very important to us in the negotiations," Deutsche Telekom CFO Timotheus Hoettges said during a company conference call, according to a March 21 report from Business Week.) That breakup fee, however - according to a May 12 Reuters report citing "sources familiar with the matter" - is actually closer to $6 billion, with an estimated $2 billion in spectrum and a roaming agreement valued at $1 billion, accompanying the more talked about $3 billion in cash. "While the cash agreement is already unusually high at 7.7 percent of the total deal price, the addition of assets and services of a similar value would mean that the companies are breaking global records with a 15.4 percent breakup fee," Reuters reported, pointing to Thomson Reuters Data. Top executives from AT&T, T-Mobile and Sprint were among the witnesses of a May 11 hearing of the Senate Judiciary Committee Subcommittee on Antitrust, Competition Policy and Consumer Rights. The Chairman of the hearing, Sen. Herb Kohl, D-Wisc., said that, in order for the deal to be approved, there was responsibility on the shoulders of AT&T CEO Randall Stephenson and T-Mobile CEO Philipp Humm to prove that combining the nation's second- and fourth-largest carriers would be a good thing for American consumers. The combined company would become by far the largest U.S. carrier, followed by Verizon, which is currently in the top spot. Sprint would become a more distant number three, which company officials have said would create a duopoly of AT&T and Verizon, hurting competition and innovation.
Sprint CEO Dan Hesse, in a May 11 press statement, echoed the sentiments he voiced during the hearing. "If AT&T is permitted to devour one of the two remaining independent national wireless carriers, while the rest of the world achieves advances in technology and innovation for the 21st century, the U.S. will go backwards - toward last century's Ma Bell," Hesse said.