In the ultra-competitive wireless carrier market, Sprint (NYSE:S) and T-Mobile (NASDAQ:TMUS) constantly battle it out to claim the No. 3 spot. But according to a recent report released by RootMetrics, Sprint fought its way back to the No. 3 spot in overall performance in the second half of 2014, leap-frogging T-Mobile's position from earlier in the year.
That's great news for Sprint, which suffered significant network issues early on in 2014. But with T-Mobile making big improvements to its network, Sprint shouldn't celebrate for too long.
How Sprint bounced back
Under leadership from its new CEO, Marcelo Claure, Sprint's been updating and upgrading its network recently. Part of the improvements come from the company's tri-band Spark network connections, which have boosted network speeds and overall reliability on parts of the network.
RootMetrics said Sprint improved its call performance and reliability, which helped the carrier improve its overall performance rating. "This jump in call performance, coupled with improved network reliability in general, helped Sprint also overtake T-Mobile in our Overall National RootScore results," the report said.
That matches up with Sprint's own claims that it's drastically improved call performance. In Sprint's most recent quarterly earnings report, the company said it improved its drop call rate by 50% year-over-year to achieve its lowest drop call rate ever.
The carrier's network improvements have come mostly in the metro and state levels (as opposed to nationwide), which RootMetrics said "appear to point toward better performance for consumers." Sprint's LTE network now covers more than 270 million points of presence (POPs) -- which is slightly ahead of T-Mobile's 264 million -- and its new, faster, 2.5 GHz Spark network has 125 million POPs.
And all of these improvements haven't gone unnoticed by consumers.
The impact on customer retention
In the fourth quarter of 2014 Sprint began turning around its previously dismal net subscriber additions, thanks in part to its network upgrades.
The carrier had 30,000 postpaid net subscriber additions in the quarter, up from a loss of 272,000 in the previous quarter. That's a huge improvement, but on a yearly basis the company still saw its net subscribers fall, down from 58,000 net adds in Q4 2013.
While Sprint's subscriber growth isn't great, it's finally moving in the right direction again, and ongoing network improvements should help push it higher.
What Sprint needs to work on
While Sprint's made big improvements to its overall performance and reliability, the carrier still fell short of T-Mobile in two key categories: network speed and data performance.
The biggest thing for Sprint to work on right now is its network speeds. "Sprint continues to trail the leaders nationally and is not yet on the same playing field as Verizon and AT&T. Sprint particularly trails in our speed index results compared to the other networks," the report said.
But the carrier is catching up to the competition at a "rapid pace" and could eventually leapfrog T-Mobile if it continues to build out its faster Spark network.
Not out of the woods yet
While Verizon and AT&T are relatively stable in their No. 1 and No. 2 spots, Sprint and T-Mobile tend to fluctuate at the bottom.
The report notes that, "Verizon and AT&T have the current lead, but as Sprint continues its Spark™ rollout and T-Mobile continues to invest in Wideband LTE, these two networks will mature past a transitional upgrade phase and could quickly close the gap."
While this may be encouraging for Sprint and its investors, it isn't hard to imagine the company continuing to jockey for third place with rival T-mobile. While the results are encouraging, Verizon and AT&T remain the dominant players in the space and both Sprint and T-Mobile have a long road ahead before they can compete at the same level as the top carriers.
Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Apple and Verizon Communications. 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.