Breaking News

Tweet TWEET

Sprint Matches T-Mobile’s Prepaid Plan as Son Eyes Bid

Sprint Corp. (S) is introducing a cheaper plan for customers in the pay-as-you-go market today, squaring off against T-Mobile US Inc. (TMUS), the leading price discounter that it hopes to acquire.

The carrier is matching a $40 prepaid plan from T-Mobile’s MetroPCS brand. Sprint Boost customers will get unlimited messaging and calling with a 500-megabyte high-speed data allotment. A $50 plan with 2.5 gigabytes of data will stay in place, while a $60 service with a 5-gigabyte data allocation is also being introduced.

The competing services are a spillover from the price battles led by T-Mobile among the major U.S. mobile carriers as they try to lure monthly subscribers. Billionaire Masayoshi Son, who controls Sprint and has met resistance from regulators skeptical about a merger with T-Mobile, is also making efforts to recast any deal as being beneficial for consumers.

“We are shifting away from a one-size-fits-all approach to a more stratified set of plans,” said Dow Draper, head of Sprint’s pay-as-you-go service. “Prepaid has always been very competitive. After the first quarter we decided to broaden our offering.”

Under Chief Executive Officer John Legere, T-Mobile’s aggressive introduction of phone financing, cheap international rates and $650 buyout offers to get customers to switch service, helped it add more users in the first quarter than AT&T Inc. (T) and Verizon Communications Inc. combined.

Price Breaks

Sprint, based in Overland Park, Kansas, lost 415,000 prepaid customers in the first three months of the year, a reversal of the 369,000 gained in the year-earlier period. The company attributed the drop to changes in recertification of its government-assisted Assurance Wireless program available to low-income families.

Price cutting isn’t necessarily sustainable, and it’s harder for smaller companies to bear, Sprint CEO Dan Hesse said in an interview on Bloomberg Television today.

“A strong No. 3 will get one and two to react more aggressively so everybody benefits,” Hesse said.

Consumers are enjoying the price breaks and smaller phone bills as a result of the accelerated competition. Verizon, the largest U.S. wireless carrier, recently matched AT&T’s price cut for big-spending, family-plan customers, which in turn was a move to get closer to the $140 a month T-Mobile charges for an equivalent package.

Legere is delivering on a promise early last year to shake up the U.S. wireless industry. He may also figure prominently should Sprint and T-Mobile combine.

Son, who is CEO of SoftBank Corp. (9984), which owns about 80 percent of Sprint, is expected to make a formal bid for T-Mobile in June or July, according to people familiar with the matter. His company and Deutsche Telekom AG (DTE), which owns about 67 percent of T-Mobile, are in talks to determine who would run the company and Legere is the leading candidate, one of the people said.

To contact the reporter on this story: Scott Moritz in New York at smoritz6@bloomberg.net

To contact the editors responsible for this story: Sarah Rabil at srabil@bloomberg.net Ben Livesey

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.