Sprint Nextel Corporation (NYSE:S) finishes takeover
Now that Sprint Nextel Corporation (NYSE:S) has finished its nearly $22 billion takeover of America’s largest wireless carrier, it is truly a monster. It now controls about 78% of the former Sprint Nextel Corporation (NYSE:S) network and is now dubbed Sprint Corporation. I think this move puts the company in a competitive position to become a major mobile competitor.
Not long after the takeover, Sprint Nextel Corporation (NYSE:S) announced a new pricing plan that I think will drive the company to major profits. The new plan allows customers to have unlimited use for a set rate. This is an improvement compared to what AT&T Inc. (NYSE:T) and Horizon Lines Inc (OTCMKTS:HRZL) have been doing. Those companies have added a slew of fees which will likely turn customers off, placing those customers securely on Sprint Nextel Corporation (NYSE:S)’s client list.
AT&T Inc. (NYSE:T) has some advantages
AT&T Inc. (NYSE:T) has a superior LET network. This is one of the three most important factors for customers, along with screen size and battery life. Despite the superior LET, the firm may need to think again about the fees that it has added. After all, once Sprint Nextel Corporation (NYSE:S) is able to catch up to its LET network then AT&T Inc. (NYSE:T)’s competitive advantage will disappear.
AT&T Inc. (NYSE:T) could benefit from its innovation, however, which is a key factor at any technology firm. The company recently announced that it would team up with Sirius XM Radio Inc (NASDAQ:SIRI), to provide a telematics offering in Nissan Motor Co., Ltd. (ADR) (OTCMKTS:NSANY) cars. As vehicles become more fully integrated with gizmos and gadgets, companies that are able to make headway in that development will realize major profits. AT&T Inc. (NYSE:T) certainly sees this, and the partnership both diversifies the company and positions it for stellar profits in the years ahead. As AT&T Inc. (NYSE:T) executive Glenn Lurie put it in a press release, “Your future car is going to be a smartphone with four wheels with powerful capabilities specifically built for a safe and enhanced customer experience.”
Verizon‘s new program is on the horizon
Verizon Communications Inc. (NYSE:VZ) is another innovative telecommunications company that is worthy of close inspection. The firm recently announced that its new Edge program is official, and this could attract a massive number of new customers. Edge doesn’t require clients to sign a contract, and as with Sprint Nextel Corporation (NYSE:S) carries no activation fees. Furthermore, the company offers a payment plan so that customers can finance their devices.
With the new plan launching at the end of August, now could be a good time to get in before the masses catch on to this new offering. Verizon Communications Inc. (NYSE:VZ) will very likely advertise the new program soon, and that is not only advertisement for people to use the company for its phone plan but also for potential investors who will likely drive up the share price.
Two of these three are more attractive
In the telecommunications business, the company that provides the greatest ease of use for its customers that will come out on top. It isn’t always possible for these firms to offer their service without the fees that customers love to hate, of course. In order for these companies to offer the most competitive prices without activation fees and contracts, they need to have a favorable return on equity.
The moves by Sprint and Verizon Communications Inc. (NYSE:VZ) to make their offerings more attractive by getting rid of fees and contracts tells me these firms are strongly positioned and worthy of consideration for your portfolio. AT&T Inc. (NYSE:T) may have to follow suit once these companies catch up in their ability to deliver high-quality service via an LET network.
The article How Do These Phone Companies Line Up? originally appeared on Fool.com and is written by Phillip Woolgar.
Phillip Woolgar has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Phillip is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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