Resale and cellular experts.
Those of us in the business of selling secondhand mobile phones have been closely following the new cell phone trends and developments in 2020. However, one piece of news that has gotten a bit buried amid it all is the T-Mobile/Sprint merger. T-Mobile successfully acquired Sprint on April 1. As you may have noticed, it’s been somewhat of a quiet summer as far as the merger goes—but that’s about to change.
T-Mobile officially folded the Sprint brand under its flagship banner on August 2. We may be seeing some ripples finally take form in the industry once some key “separation dates” get here. The big, obvious development impacting both resellers and customers is that we’re down to just three major cell carriers in the United States (Verizon, AT&T, and T-Mobile).
What should we expect down the pipeline as a merger that’s mostly been on paper up until now takes shape in real life? Let's explore some key speculation points related to the T-Mobile/Sprint merger with a focus on the impact the newly formed conglomerate could have on secondhand mobile phones. There are some interesting things to look at, specifically in terms of pre-2020 5G devices being traded in prematurely in some markets.
While there are many peripheral advantages to merging for both carriers, resellers should make no mistake about the fact that there is one main objective behind the T-Mobile/Sprint merger:
This conglomerate will be highly focused on bringing 5G to more places.
In fact, the partnership’s ability to dominate in the 5G market hinges specifically on a strategy of bringing 5G to rural markets faster than anyone else can. T-Mobile needed Sprint under its tent due to Sprint’s well-known, long-standing relationships with the nation’s rural carriers.
We’re potentially looking at a future where T-Mobile will be pushing for every customer to be a 5G customer. An expanded 5G network across rural parts of the country means that more cell customers may be eager to trade in existing devices for 5G devices. This could increase the supply of newer, non-5G devices on the resale market as T-Mobile advances its plans.
It looks like T-Mobile is taking every measure necessary to make sure current Sprint customers can enjoy a changeover that’s as non-abrupt as possible. For now, both Sprint and T-Mobile customers can keep doing exactly what they’re doing, including visiting the same brick-and-mortar stores that have served them as their cellphone homebase thus far. In addition, all online account management for Sprint customers will be exactly the same for the time being.
The long-term goal is to transition all Sprint customers over to the T-Mobile network before creating a combined, supercharged network. T-Mobile has also promised to preserve pricing for three years. While customers will see branding updates across their accounts in the upcoming months, they won’t see any bill increases or changes until 2023.
In addition to folding millions of Sprint customers into its brand, T-Mobile is also aggressively trying to court “switchers” from the nation’s two major carriers using an aggressive trade-in offer. T-Mobile will pay off the remaining device payments or service contracts for all customers who make the switch from Verizon or AT&T.
The carrier will be handing out up to $650 per line via trade-in credits and virtual prepaid cards whenever a customer trades in an existing phone for a new one. This will have an obvious impact on the trade-in market if customers bite.
One of the more complicated aspects of the merger of T-Mobile and Sprint is that they use different technologies to power their 2G networks. While T-Mobile uses GSM, Sprint uses CDMA. As you may know, the big difference is that CDMA phones generally don’t use SIM cards like GSM phones do unless they’re LTE-enabled devices.
The speculation now is that T-Mobile will choose GSM as it makes the pivot to unify the entire conglomerate to a single form of technology. This means that current Sprint customers going along for the ride with T-Mobile will find themselves with devices that are not compatible with their networks in the not-so-distant future. As a result, these customers will need to upgrade to new devices to be able to get network coverage. Yes, T-Mobile is making a big show of saying that nothing is changing for Sprint customers; however, it seems inevitable that the merger will cause a large portion of current Sprint customers to outgrow their devices prematurely.
We’ll also see something of a device limbo for millions of existing Sprint customers with 5G-compatible devices from now until the three-year merger process is completed in 2023. We expect that any Sprint 5G phone that came out before the Galaxy S20 will be rendered outdated because Sprint 5G phones released in 2019 will not be getting updates to enable access to T-Mobile’s 5G network. The affected devices include the OnePlus 7 Pro 5G, Samsung Galaxy S10 5G, and the LG V50 ThinQ 5G. Those devices will still be capable of tapping into Sprint’s 4G network, but only where it’s still available.
T-Mobile has tried to smooth the rough patch by offering discounted 18-month leases on Galaxy S20 5G phones to replace the soon-to-be outdated devices. This is interesting for resellers because even fairly new 5G phones from before the February 2020 release date of the S20 may be appearing in the resale market much earlier than would be expected without the Sprint/T-Mobile merger.
We can also look ahead to potentially seeing post-lease S20 5G phones hitting the market 18 months from now (potentially February 2022).
T-Mobile isn’t giving any behind-the-scenes looks at how it’s handling the resale of traded Sprint devices. That means we don’t yet know if they will continue to sell their used devices separately or consolidate used phone supply.
However, it’s pretty clear that the two brands will have a consolidated used phone supply by at least the 2023 deadline for the merger being fully complete. The one thing that does seem certain is that whatever channel T-Mobile decides to use to deposit Sprint devices that are traded in will see more CDMA and pre-2020 5G devices.
The T-Mobile/Sprint merger will affect 5G device traffic for resellers. Existing Sprint customers who would have held onto their devices may create an influx of pre-2020 devices much sooner than expected. In addition, we may see more CDMA than GSM devices traded in than usual as Sprint customers adjust to T-Mobile’s network.