Sprint (NYSE:S) has gotten aggressive.
The struggling wireless carrier, which has fallen to fourth place in the highly competitive field, has set its sites on one of the market leaders, AT&T (NYSE:T), which just completed a $49 billion purchase of DirecTV. Sprint's new offer targets the satellite customers AT&T acquired in that deal, offering them a year of free phone service if they switch to Sprint.
It's a bold play where the smallest of the major carriers is trying to undermine its rival, which has been offering DirecTV's subscribers up to $500 a line if they switch to AT&T. Sprint is also paying any early termination fees the satellite company's customers may incur when leaving whichever wireless provider they currently use.
Sprint is calling the deal a celebration of the merger between DirecTV and AT&T, but it's not exactly bringing its rival a cake. The upstart carrier is attempting to rain on the party and make off with the guests.
What is happening here?
A large part of the reason AT&T purchased DirecTV was to be able to offer bundles including satellite TV and wireless phone service to its over 20 million pay-TV subscribers. The portion of that audience not already using AT&T for phone service could in theory be enticed to switch with various incentives.
Sprint is essentially offering its own bundle discount to DirecTV customers who simply have to prove that they are subscribers to the satellite service to get the deal. The carrier is making the deal relatively easy to claim and explains it fully on its website:
Beginning Friday, Aug. 28, through Sept. 30, DIRECTV customers switching to Sprint or existing Sprint customers adding a new line of service through Sprint Lease, iPhone Forever, Sprint Easy Pay1 or paying full retail price for a smartphone get 12 months of unlimited talk, text and a full 2GB of data per line (up to five lines) all while on the Sprint network. Qualified DIRECTV customers simply need to upload their recent DIRECTV bill at www.sprint.com/directvoffer. Then, they can go to Sprint.com or call Sprint Telesales to obtain the offer. Or, they can visit their local Sprint store and log on to their DIRECTV account online to show verification and sign up. Customers are responsible for the one-time $36 activation fee and monthly taxes and surcharges.
The deal does not include a phone, so switching customers will have to buy, finance, or lease one. Sprint is clearly having some fun in going after its bigger rival. Sprint's Chief Marketing Officer Kevin Crull said in a press release:
DirecTV customers love their TV service -- but they shouldn't have to settle for AT&T wireless. Why not build the perfect bundle by combining with Sprint wireless? We're winning awards across the country because our network has never been stronger, faster or more reliable, and our customers have never been more satisfied.
AT&T is still better
Crull's comments are true, but they ignore the fact that Sprint's improved network still ranks behind AT&T's in the most recent RootMetrics survey. It's hard to classify picking AT&T over Sprint as "settling" when the numbers simply don't back that up from the study covering the first half of 2015.
AT&T does not seem amused by Sprint's attempt to "celebrate" its purchase.
"This ranks right up there with a desperate Hail Mary pass to a petite defensive lineman," AT&T spokesman Brad Burns told The Wall Street Journal. "With Sprint's network and the many asterisks on this deal, we're feeling good about our offers."
Sprint has nothing to lose
Though the company may have gotten a little out of hand in trash-talking its rival, Sprint really has nothing to lose, here. It needs to make bold efforts to get people to at least consider it as a viable option, and this one certainly counts as that.
In the long run, it probably makes more sense for DirecTV customers to go with AT&T because of the convenience of having one bill. Still, Sprint's offer keeps AT&T honest and forces it to offer a decent deal to its new customer base, because they now have a viable choice.
Sprint's comeback won't hinge on one deal, but moves like this show it at least has signs of life.
Daniel Kline has no position in any stocks mentioned. He is a Sprint customer who constantly thinks about switching. The Motley Fool has no position in any of the stocks mentioned. 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.