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Sprint is showing faint signs of life.
Sprint
The nation’s third-largest wireless carrier, which has suffered through several quarters of customer defections, finally returned to growth as customers took up Sprint’s offers for discounts and bigger data plans. The company added nearly 900,000 customers in its Sprint business. Most notably, it added 30,000 subscribers who pay at the end of the month, a customer segment Sprint has struggled to attract because people think its network lags behind competitors.
The Overland Park, Kan., company rolled out an aggressive slate of promotions over the last several months, including an offer to double the amount of data the competitors supplied. The marquee offer was Sprint’s ” Cut Your Bill In Half” promotion, which promised to significantly slash the smartphone bills of customers willing to switch from AT&T or Verizon. The program was bolstered by an ad campaign featuring customers taking a sword, chainsaw or some other sharp instrument to their old AT&T or Verizon bill. The company intends to keep the program going through the entire year, according to CEO Marcelo Claure.
Sprint’s new attitude comes courtesy of Claure, who joined the company in August with a mission to supercharge the company. The result: Better discounts and more data available to consumers, and Sprint positioning itself as a viable wireless carrier and an another upstart alongside T-Mobile. For the carriers, this has meant an intensifying period of competition, with both AT&T and Verizon reporting an upswing in customer turnover.
“We’re making progress on all fronts,” Claure said in an investor call on Thursday.
Charges related to its wireline assets and a write-down of its Sprint trademark took their toll on results. The company posted a loss of $2.38 billion, or 60 cents a share, compared with a year-ago loss of $1.04 billion, or 26 cents a share. Excluding those charges, Sprint would have lost 24 cents a share.
Revenue fell 1.8 percent to $8.97 billion.
Analysts, on average, had forecast a loss of 24 cents a share and revenue of $8.68 billion, according to Thomson Reuters.
Sprint shares rose 2.4 percent to $4.69.
“Their subscriber metrics have gotten better (a little),” MoffettNathanson analyst Craig Moffet wrote in a research note. “But their financial results have gotten worse. The questions about burn rate and when Sprint will run out of cash are becoming inescapable.”
While Sprint has reversed its trajectory, it has a long way to go to catch up with T-Mobile in terms of growth. T-Mobile said last month that it added 2.1 million customers in the same period.
Still, Sprint’s customer growth was strong enough that it kept T-Mobile at bay as the No. 4 wireless carrier. T-Mobile CEO John Legere had said he had expected his company to surpass Sprint by the end of the year.
The rivalry between Sprint and T-Mobile has heated up in the last few weeks. Late last month, Sprint dangled a $200 guaranteed smartphone trade-in credit to any T-Mobile customer willing to switch, the first time it explicitly went after the company. Claure and T-Mobile CEO John Legere have begun trading barbs over Twitter, with a recent exchange kicking off during the Super Bowl.
Sprint added 892,000 net new customers in the period, with growth in the Sprint platform, which includes its prepaid and wholesale business, offset by losses in its dismantled Nextel service. A bulk of its growth came in the prepaid area, where Sprint sells service through its Virgin Mobile and Boost Mobile brands, and in wholesale, where it resells service to companies such as Republic Wireless.
Much of the 30,000 customers added came from the tablet business. Sprint lost 205,000 net phone customers in the period.
Like AT&T and Verizon, turnover remained a problem for Sprint. The company’s rate of customer cancellations on the retail postpaid side, or customers who pay their bill at the end of the month, rose to 2.33 percent from 2.15 percent. Its prepaid turnover rate also rose.
Claure said that the company is adding customers with a stronger credit rating, which tend to be more loyal. The company is also proactively going after customers with a tendency to leave with aggressive, individualized promotions and offers.
“We feel extremely good about what churn will be this quarter,” Claure said. “As we exit January, we see a nice trend forming.”
Updated at 6:03 a.m. and 6:31 a.m. PT: To include additional background, analyst and executive comments and an updated stock quote.
