Sprint's half-off promo pays off with 491,000 new customers
The nation's fourth-largest wireless carrier turns heads and gets back on the path to growth thanks to aggressive discounts.
- SABEW Best in Business 2011 Award for Breaking News Coverage, Eddie Award in 2020 for 5G coverage, runner-up National Arts & Entertainment Journalism Award for culture analysis.
Sprint had a strong quarter for post-paid customer growth.
How does a wireless carrier get your attention? By promising to cut your phone bill by half.
Sprint wagered that consumers would be willing to ignore its reputation for subpar service if that meant saving a few bucks. True, it has upgraded its network and sped up its service, but the reality of those improvements hasn't overtaken the perception that it lags behind rivals Verizon Wireless, AT&T and T-Mobile.
So in November the Overland Park, Kansas, company came out swinging, promising once again to halve the phone bill for anyone switching from a rival carrier. The move echoed a program Sprint introduced a year earlier, but added T-Mobile to the mix and targeted specific rival plans.
Sprint, the nation's fourth-largest wireless carrier, was just one among many carriers offering discounts or perks during the holidays, which ended up being a boon for savvy shoppers willing to dig for the best deals. As growth in the wireless business matures, the carriers are eager to pull out all the stops to win your business.
The gambit brought some glow to Sprint during the holiday period. The company added 491,000 customers in its fiscal third quarter. More importantly, it added 501,000 so-called postpaid subscribers, the largest growth in four years. These higher-credit consumers typically are willing to pay more and stick around longer, and they're highly coveted by the carriers. This is only the second quarter in more than two years that Sprint added postpaid customers.
"The quarter marks a big step forward in our turnaround," CEO Marcelo Claure said on an investor conference today.
Yet the promotions came at a hefty price. The company posted a loss of $836 million, or 21 cents a share, on revenue of $8.11 billion. That compares with a loss of 25 cents a share and revenue of $8.23 billion that Wall Street had expected, according to Thomson Reuters.
Still, the results are better than the year-earlier period, when the company posted a loss of $2.38 billion, or 60 cents a share.
The aggressive pricing also meant improved customer loyalty. Sprint's turnover rate on the postpaid side fell to 1.62 percent from 2.3 percent a year ago.
Sprint's prepaid services, which have traditionally been strong for the company, lost 491,000 customers as T-Mobile and its MetroPCS arm and AT&T and its Cricket service have stepped up their promotions and marketing on the prepaid side.
Sprint shares rose 17.9 percent to $2.97 in premarket trading.