Is AT&T Inc. (NYSE:T) easily offended? Could it be a bully? As the nation’s second-largest wireless carrier – and an interesting stock play for a number of equity hedge funds that we monitor – it has been expending some money and energy trying to catch Verizon Communications Inc. (NYSE:VZ) in 4G LTE network rollout as well as customers. So why in the world would this company be spending money to go after T-Mobile USA, which is a distant fourth in wireless market share?
Well, if AT&T Inc. (NYSE:T) is a bully, then it might be just reacting because T-Mobile USA kicked sand in its face recently. Which seems really uncivil, since these two companies that at one point were about to consummate a marriage before federal regulators stepped in.
AT&T Inc. (NYSE:T) has taken out a full-page ad in newspapers around the country this week, written as an attack ad of T-Mobile USA. In the ads, AT&T makes the claim that T-Mobile’s network drops twice as many calls as AT&T, and AT&T’s network is double the speed of T-Mobile. What would bring this on? Apparently this stemmed from some comments made at the Consumer Electronics Show in Las Vegas in March, where new T-Mobile USA chief executive John Legere – who came to power in September – called the AT&T network “crap.”
Gasp! Oh the uncivility! While AT&T Inc. (NYSE:T) is spending the money trashing T-Mobile USA while trying to build up its own network above the “crap” assessment, T-Mobile is taking this in stride. “Wow. Looks like we struck a chord,” T-Mobile chief marketer Mike Sievert wrote in an e-mail. “AT&T doth protest too much. Glad they’re spending their money to print our name.”
According to AdAge data, AT&T Inc. (NYSE:T) spent nearly $2.4 billion in advertising last year, making it the fifth-largest advertiser in the country, while T-Mobile USA doesn’t list in the top-100. In the ads T-Mobile has run, it has boasted about its own network speed and geographic reach. As expected, though, AT&T takes exception.
“T-Mobile’s advertising is a combination of misguided and just plain wrong,” said AT&T spokesman Mark Siegel, explaining that the recent ad buy is “just a friendly reminder of the fact that independent third-party testing says AT&T’s network delivers faster speeds and fewer dropped calls than them.”
What do you think of this battle? Should AT&T Inc. (NYSE:T) be picking on someone its own size, or is T-Mobile USA being successful at expanding its marketing reach to attempt to make a run at market share? We’d like your thoughts in the comments section below.
DISCLOSURE: I own no positions in any stock mentioned.
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