Ting, an MVNO that offers services on the Sprint and T-Mobile networks, said it plans to dump T-Mobile for Verizon. The reason? The ongoing drama around the proposed merger of Sprint and T-Mobile.
"We had expected that the proposed Sprint/T-Mobile merger would have been resolved by now. If that had happened, we would have been able to engage with the parties and assess the financial implications of potential post-merger relationships," said Elliot Noss, CEO of Ting parent company Tucows, in a statement provided by the company. "However, because the merger has not occurred, we had to assess our relationships with Sprint and T-Mobile separately."
As a result of the move, Tucows said it now expects its cash earnings before interest, tax, depreciation and amortization (EBITDA) to be $52 million this year, down from its previous expectations of $62 million.
"A number of factors motivated these changes," Noss continued. "With Verizon, we will be adding the network that in our opinion has the best coverage and performance ratings in the U.S. Our contract with Verizon is better than that with T-Mobile in terms of rates, guarantees and other financial terms, which had negatively impacted Ting Mobile's past performance. Finally, our dealings with Verizon to this point have been productive and professional."
Ting said it will retain its agreement with Sprint for another year. "We're pleased to have extended our relationship for an extra year," he said. "The economics are competitive, and we have a productive relationship with the current Sprint team. This additional year gives us time to see what happens with the Sprint/T-Mobile merger and make an assessment as to the best course for Ting after September 2020."
Ting is one of dozens of MVNOs in the US market. Others include Consumer Cellular, TracFone and Republic Wireless. Such companies essentially piggyback on the wireless networks operated by the likes of AT&T, Verizon or T-Mobile by purchasing wholesale access and then providing their own phone activation, service billing and customer service. MVNO customers may never know that they're actually using another company's wireless network.
Noss had hinted earlier this year that Ting was not happy with its MVNO agreement with T-Mobile. "In Q1 we experienced non-product costs due to our current carrier relationships -- both penalties and other costs that were well in excess of what we have had in the past. That outsized impact was over $1 million," he said in May.
Ting finished the first quarter of this year with 160,000 MVNO accounts and 284,000 subscribers, which the company noted was a decline of 2,600 accounts when compared with the same quarter a year ago.
Sprint and T-Mobile, of course, are desperately working to salvage the merger they had hoped to close by the end of June. The companies are reportedly working with Dish Network and the Department of Justice on some kind of transaction that would allow Sprint and T-Mobile to merge while setting up Dish as a fourth nationwide wireless provider.