Sprint to slash pricing starting next week, report says
Sprint's new CEO has only been on the job four days and is already promising employees "disruptive" price cuts as soon as next week, according to a report from Light Reading. Will this move finally stem Sprint's subscriber losses?
Sprint's new CEO Marcelo Claure is wasting no time in making good on his promise to slash pricing in order to compete with wireless rivals.
During a company-wide town hall call on Thursday, Sprint's new boss told employees that the company would be implementing "very disruptive" price cuts that would start as soon as next week, according to a report from the website Light Reading.
"We're going to change our plans to make sure they are simple and attractive and make sure every customer in America thinks twice about signing up to a competitor," Light Reading quoted Claure as saying.
He explained the price cuts are a necessity in order for Sprint, which is the third largest wireless provider in the US, to compete with bigger rivals AT&T and Verizon Wireless, as well as the aggressive maverick in the market T-Mobile.
"When you have a great network, you don't have to compete on price," he said, according to Light Reading. "When your network is behind, unfortunately you have to compete on value and price."
Claure also told employees that after price cuts on its service plans, the company would focus on improving its network and cutting operational costs.
A Sprint spokeswoman declined to comment on the company's plans to cut pricing starting next week. But she confirmed that Claure "held his first all-employee town hall today in front of a standing-room-only crowd. He shared his passion for his family, work, and soccer team and his commitment to leading Sprint. He discussed Sprint's challenges and pledged to get Sprint 'back in the game' by focusing on providing the best value in the market, completing our network build and optimizing Sprint's cost structure."
The new CEO's pep talk comes at a time when Sprint is struggling to keep customers. Last month, Sprint said it had swung to a profit in the fiscal first quarter, but it still lost a net 220,000 subscribers. Meanwhile, rivals AT&T and Verizon continue to dominate the market for wireless service in the US with a combined market share over 70 percent. And T-Mobile, which Sprint openly considered as an acquisition target, continues to shake up the market with its "Uncarrier" strategy, which has disrupted pricing and service plans throughout the industry.
Claure admitted during the call with employees that Sprint's "Network Vision" upgrade plan, which essentially ripped out old infrastructure and replaced it with more flexible gear, took too long and damaged the company's reputation, Light Reading reported. The slow rollout of its 4G LTE network has also been problematic for the company, as its coverage and speeds lag behind those of its competitors.
Claure also acknowledged that Sprint failed to react to competitive moves. The company has leaned heavily on its "Framily" friends and family program as its main offering. But Claure told employees that the benefits of the plan were poorly articulated by retail salespeople and partners. As a result, Sprint has been hammered by simpler, discounted no-contract offerings by competitors such as AT&T and T-Mobile.
When asked about job cuts in order to reduce operational expenses, Claure acknowledged there would be some job losses, Light Reading reported. But he didn't provide further details.
Claure's quick and decisive move to slash pricing as early as next week should come as a surprise to no one. Even though Claure has only been on the job four days, he joined the company's board of directors in January. And since then he has been in close contact with Masayoshi Son, Sprint's chairman and the CEO of SoftBank, Sprint's parent company.
"This is an opportunity for the company to change strategy," said Maribel Lopez, principal and founder of Lopez Research. "If the new guy comes in and doesn't change things, it's a lost opportunity."
Claure, who founded Brightstar, a wireless equipment and services company, is known for making bold moves. And he was brought in specifically to shake things up after it became apparent to Son and the rest of Sprint's leadership team that regulators would not approve a merger with T-Mobile. In a statement when he was appointed CEO last week, Claure indicated that price cuts would be coming.
"In the short-term, we will focus on becoming extremely cost efficient and competing aggressively in the marketplace," Claure said in a statement. "While consolidating makes sense in the long-term, for now, we will focus on growing and repositioning Sprint."
Even Sprint's former CEO, Dan Hesse, had already alluded to "refreshing" the company's service plans. On the company's earnings conference call last month, he confirmed the company was testing out new pricing options. CNET News previously reported on some of the new options being considered.
Sprint had previously scheduled an event in New York City for Monday. Perhaps more details about price cuts will be unveiled then.