T-Mobile (NASDAQ:TMUS) has been riding high in the domestic wireless industry lately, thanks largely to its aggressive tactics that are putting major pressure on larger rivals. According to a recent Counterpoint Research report, The Un-Carrier has now risen to become the No. 3 player in the domestic market with smartphone sales, surpassing Sprint (NYSE:S).
If measured based on total connections (including feature phones), Sprint still comes out ahead by a small margin. However, smartphone subscribers are far more valuable than feature phone subscribers, and smartphone penetration has hit a new high in the U.S. of 87%.
With T-Mobile's gains, the rumored merger with Sprint continues to look unlikely. Regulators have tried to pre-emptively and publicly downplayed the likelihood of such a merger getting cleared, but that hasn't stopped Masayoshi Son from lobbying Congress. If combined, Sprint and T-Mobile would have a total subscriber base within spitting distance of Verizon (NYSE:VZ), which would dramatically reduce its incentive to compete aggressively on price.
In this segment of Tech Teardown, Erin Kennedy discusses T-Mobile's rise with Evan Niu, CFA, our tech and telecom bureau chief.
(Relevant segment begins at 4:96)
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Erin Kennedy owns shares of Apple. Evan Niu, CFA owns shares of Apple and Verizon Communications. Evan Niu, CFA has the following options: long January 2015 $460 calls on Apple and short January 2015 $480 calls on Apple. The Motley Fool recommends Apple and DirecTV. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.