The failed merger of T-Mobile and Sprint will likely benefit a struggling U.S. wireless market, according to MoffettNathanson Research. But Sprint still faces a major challenge in catching up to its bigger rivals.

The two carriers earlier this month walked away from merger negotiations due to concerns about who would control the combined company. A tie-up would have resulted in nearly $50 billion in added value for the merged operator, according to New Street Research, and analysts generally agree that a consolidated market of three major operators would be a boon for the overall industry.

But Sprint’s unwillingness to close the deal will force the carrier to focus on its bottom line rather than simply grabbing market share, Craig Moffett of MoffettNathanson wrote. And that should also help its rivals.

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“The prevailing narrative over the past few months was that three competitors would surely be better than four,” Moffett wrote in a note to investors. “Yes, it may well be the case that the structure of the industry would have been more hospitable had the industry shrunk from four to three. But there are real-world considerations that this theoretical proposition ignores. First, robbed of the prospect of a merger—at least for now—Sprint will now have to focus on sustainability. That means less, not more, promotionality. With less promotionality will come not only less pricing pressure, but probably also fewer net adds for Sprint… and hence more for everyone else. Meanwhile, T-Mobile has committed to return cash to shareholders. That, too, likely means less, not more, promotionality.”

Whether Sprint can continue to compete as a standalone company is far from clear, however. Sprint carries $38 billion in debt, about half of which will come due over the next four years, and it plans to spend billions to upgrade its network to close the gap with its larger competitors.

“Sprint’s path forward is treacherous,” Moffett wrote. “The company will no longer simply play a waiting game, maintaining subscriber numbers through the acquisition of lower-value customers and slashing capex to maintain free cash flow in order to dress up its exchange ratio. Perhaps the most important development here is that after years of suggesting that they didn’t need to spend any more money on their network to achieve best-in-class performance levels, Sprint has announced its intent to raise prices sometime this quarter, and has dramatically increased their medium-term network capex guidance to $5-$6 billion per year on the lower end. To state the obvious, this is money that Sprint doesn’t have.”

MoffettNathanson retained its sell rating on Sprint, cutting the target price to $2 from $6 a share. The firm upgraded its outlook for T-Mobile to buy, raising its target price to $73 from $69 per share.