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Craig Moffett, co-founder of the eponymous boutique research house Moffett Nathanson, today calls Sprint’s (S) offer of one year of free, unlimited wireless service to new customers “arguably the most aggressive promotion in the history of the U.S. wireless industry.”

The deal, which targets people who bring their phone from one of the other Big Four — AT&T (T), Verizon Communications (VZ), or T-Mobile US (TMUS) — sends a “stark” signal, writes Moffett.

It might only lure a small number of new subscribers, as the promo ends this month, or “customers could sign up in droves."

“There are an awful lot of customers now off-contract for whom a year of free service might sound pretty appealing."

Exclaiming “free bananas!”, Moffett wonders what to make of “Sprint’s motivation in pulling the trigger on a promotion that … by definition won’t bring in any money?”

He notes Verizon jumping into the all-you-can eat pool this past spring, and how it preceded a “truly lousy quarter,” for Verizon, and imagines this is a sign that “Comcast (CMCSA) is already having an impact,” or that store closures are “having a larger-than-anticipated impact,” or that “Sprint is struggling to offset rising churn levels as customers roll off of past promotions."

Whatever the case, Moffett thinks this is blow to any hopes of a merger with T-Mobile:

Sprint and T-Mobile have been test-running a narrative along the lines of “If you think it’s competitive now, imagine what we could do if we merged.” Well, it’s hard to imagine that regulators will be tempted to imagine anything much better than giving away service for free (imagine!). A second, and perhaps more reasonable, argument for a merger would have been “we can’t sustain even the current level of competitive intensity without the improved economies of scale that would come from a merger.” You can imagine that regulators will now cross that argument off the list.

Moffett expects the response to this from the industry “won’t be pretty."

Sprint stock today is up 10 cents, or 1.2%, at $8.31.