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Mobile

For Sprint, promotions can't erase a poor service reputation

Despite aggressive discounts compared with its rivals, Sprint saw a decline in a key segment for subscribers.

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Despite aggressive promotions, Sprint continues to lag behind all of its rivals.

Sprint

It turns out 1 percent makes for a huge difference.

In recent months, Sprint has contended that its overall network reliability is within 1 percent of larger rivals Verizon and AT&T, and actually exceeds T-Mobile, and that you're better off with one of its plans, which can be as much as half off the competition's rates. Why pay so much more for so little difference?

Consumers aren't buying into that argument. And while Sprint has done a lot to improve the quality of its network, its reputation for poor service continues to dog the company.

Just look at its fiscal fourth-quarter results, in which it posted a loss of 118,000 postpaid subscribers, or customers who pay at the end of the month and typically boast higher credit scores and loyalty. Overall, it added 187,000 customers, helped by its prepaid and wholesale business.

The numbers look eerily similar to those of AT&T and Verizon, which both posted heavy postpaid losses in the period. Their poor results underscore the intense competitive pressure brought on by T-Mobile and its push to get people to join its unlimited plan. That move forced Verizon to launch its own unlimited offering and got AT&T and Sprint to tweak their unlimited plans to match.

(Read more about all of the unlimited plans here.)

Sprint's decline reversed several quarters in which the company added post-paid customers. CEO Marcelo Claure said the shortfall came from a loss of tablet customers. The company has shifted its focus away from tablets.

With all four nationwide players reporting, it's clear T-Mobile once against outstripped all of its competitors in postpaid growth.

It wasn't a total loss for Sprint. The company said it added 42,000 postpaid phone customers, noting that it gained more postpaid phone customers than Verizon for five consecutive quarters and more than AT&T for 10 consecutive quarters.

Sprint wants to change the story so it's not just barely behind AT&T and Verizon on network quality, and actually No. 1 or No. 2 in all markets. Chairman Masayoshi Son vowed that Sprint would hit that market by the end of next year. The company unveiled the "Magic Box," essentially a signal booster that doesn't require a broadband connection that looks a lot like a compact window air conditioning unit.

Son was repeatedly asked by analysts about potential combinations with other players, and kept things vague. He said he was open to all possibilities, but wasn't in any rush.

In total, Sprint saw its revenue rise 5 percent to $8.54 billion. It narrowed its loss to $283 million, or 7 cents a share, from a year-earlier hit of $554 million, or 14 cents a share.

Analysts, on average, had forecast revenue of $8.69 billion, according to Yahoo Finance.

Sprint shares fell 0.8 percent to $9 in premarket trading.

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