T-Mobile US Inc. and Sprint Corp. have made the case to U.S. regulators that their pending wireless merger will benefit consumers, but customer satisfaction ratings at one of the companies have gone down since the deal was first announced.
Sprint saw its score from the American Customer Satisfaction Index fall to 65 in 2019, down from 70 a year earlier. T-Mobile, by contrast, had the highest satisfaction score among the top U.S. wireless operators, maintaining an ACSI score of 76 across both years. The index uses data from interviews with about 300,000 customers to create a scale ranging from zero to 100. The model incorporates a range of factors such as network quality; the experience that customers have in stores, with call centers or on company websites; and perceptions of value.
"There are all sorts of goodies that go into the total customer experience with a wireless carrier. Sprint doesn't do particularly well in almost all of those areas, but the key driver in this space … is quality of the network," ACSI Managing Director David VanAmburg said in an interview.
Sprint's network ranked last in quality, earning a score of 72 in 2019 from ACSI, as compared to 80 for Verizon Communications Inc., 78 for AT&T Inc. and 77 for T-Mobile. Other measurement firms have reported similar findings. Mobile analytics company Opensignal Inc., for instance, reported in July 2019 that while Verizon and T-Mobile lead in various network measurements like 4G availability and download speeds, Sprint — though making year-over-year improvements — continues to trail its peers across all categories.
A big question for VanAmburg and other industry experts, as well as for regulators, is whether the proposed combination of Sprint and T-Mobile will lead to higher or lower satisfaction ratings among customers as the two companies are integrated.
VanAmburg noted that in most cases after a merger is completed, customer satisfaction actually goes down, at least for one to three years.
"Whenever companies have to merge accounts or portfolios of customers, you tend to see, at least initially, a lot more hiccups," VanAmburg said, giving examples such as customers getting billed twice or having certain perks like rollover minutes get lost between operators.
"Those types of things tend to plague mergers of these types of companies because they are not just merging their operations but also these giant portfolios of customers," he said.
On the other hand, Sprint customers will be gaining access to the T-Mobile network and T-Mobile customer service centers — something that Recon Analytics analyst Roger Entner, whose research focuses on the wireless experience, expects to lead to higher satisfaction ratings.
"I think the Sprint customers could actually experience better customer service under T-Mobile than what they experience right now," Entner said, noting that Sprint has been in "savings mode" in recent years and cutting back on its customer service spending, even as it has seen an increase in capital expenditures to improve its network.
Sprint's capital expenditures for fiscal 2019, ended in March, totaled $12.40 billion, up from $10.78 billion in fiscal 2018 and $6.93 billion in 2017.
VanAmburg also thinks that over the long term, Sprint subscribers could see better customer service from the combined entity but said he remains concerned about the near term.
"T-Mobile having a much better rating may be helpful there. The problem is that … there are a lot of relatively unhappy [Sprint] customers, and it's not clear what their expectations are going to be once this merger has taken place," VanAmburg said.
If customers expect an immediate improvement, they may end up disappointed during the integration process, he said.
T-Mobile has outlined a plan whereby it expects to migrate all Sprint customers to an integrated network within three years of closing the deal. As of the deal's announcement in April 2018, about 20 million Sprint customers already had smartphones compatible with T-Mobile's network. Sprint's wireless subscriber base totaled 54.3 million as of the end of the June quarter, including 33.1 million postpaid subscribers.
T-Mobile executives have assured customers and investors that its migration plan will "minimize disruptions" in terms of network integration, billing systems and customer care.
T-Mobile and Sprint's merger has won conditional approval from the U.S. Department of Justice and support from the U.S. Federal Communications Commission — the two federal regulatory agencies that must approve the deal before it can close. However, it continues to face opposition at the state level, where it has been challenged in court by more than a dozen state attorneys general.
A trial date in the case is set for December.