The latest announcement comes days after T-Mobile said it was giving out three months of free, unlimited data to many of its own customers. The company added Wednesday that the Sprint deal would be followed by others aimed at AT&T and Verizon.
If the gamble works, T-Mobile could finish the year by adding even more new subscribers. But as T-Mobile rolled out the Sprint promotion Wednesday morning, its stock fell by more than 2.5 percent.
Why is this happening? Analysts say that T-Mobile's decision to offer switchers deep discounts will add to the company's costs at the same time that it needs to maintain its momentum. Investors have long been worried that T-Mobile's strategy is unsustainable in the long run, and they're looking very closely at how much the company makes on each customer.
By offering $200 to every Sprint user, T-Mobile will be raising its customer acquisition costs, cutting into those all-important per-customer margins. But it could prove attractive to many consumers.
"We know Sprint’s customers love T-Mobile when they switch," T-Mobile chief executive John Legere said in a release. "So this holiday season, we’re taking away every barrier and cost to coming over."
The Sprint offer goes live on Thanksgiving Day.