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Sprint Sparks to Reduce Churn, Save Unlimited

Sarah Thomas
3/10/2014
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Sprint's No. 1 priority this year is improving its network. It's a matter of keeping both its customers and its unlimited promise, the carrier's CFO said on Monday.

Speaking at the Deutsche Bank Media, Internet & Telecom Conference, Sprint Corp. (NYSE: S) CFO Joe Euteneuer reiterated the remaining steps in its Network Vision upgrade. The No. 3 US operator plans to complete the rip and replace of its 3G network by midyear, at which time it will also have 250 million PoPs covered with LTE. With help from its new owner SoftBank Corp. , it also plans to cover 150 million PoPs with 800 MGhz LTE and 100 million PoPS with its tri-mode Sprint Spark network by the end of 2014. (See Sprint Sparks It in Chicago and Sprint Plans Indoor, Outdoor Small Cells in 2014.)

Sprint needs to close the gap on its competitors in terms of network functionality, but it also needs to stop the customer bleeding. That's why Network Vision is so important, even if it's causing short-term pain. Euteneuer said that churn has gone up at the operator in markets where Network Vision is in the construction phase, but it tends to go down when it nears completion. (See Sprint Feels the Churn Burn Before Spark.)

In the markets where Network Vision is now at 70% construction or more and has been up and running for four months, Sprint has seen an improvement of 20-25 basis points in churn. "The realities are churn was high in the fourth quarter; it's going to remain high in the first quarter," he said. "If we're lucky, you might start seeing it [improve] in the second quarter, because we'll have so many cities down, but it's that balance of how many cities do you have over 70% complete for how long, and then you get the benefit of that reduction in churn."

The carrier, of course, also needs to work on adding more customers, but that's priority No. 3 behind its formidable network challenges. Euteneuer said Sprint would spend extra money in the first quarter to keep the "gross add engine going." (See Sprint Adds 58K Postpaid Subs in Q4.)

"When we look at the full year, we see the positive side of net adds in the later part of the year and suffering what this construction phase is, this portion to complete, as we finish it up through the first half of the year," he said.

Euteneuer also mentioned several times that Sprint has stayed true to offering unlimited data, even as pricing competition has increased, and it's something it wants to continue to protect. Upgrading its network will help it continue to do so from a capacity perspective. Sprint is also managing the network far tighter than it ever has before, including shutting down those "five to 10 people that decide they want to run server farms" pretty quickly. (See Sprint Launches No-Sharing 'Framily' Plans and T-Mobile Leads, Sprint Suffers in Pricing Wars.)

"We run that very, very tightly, and I feel good that unlimited does have some legs and longevity," Euteneuer said. "When you saw the announcement of taking over Clearwire, that gave us a lot more runway than we ever had before."

— Sarah Reedy, Senior Editor, Light Reading

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Sarah Thomas
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Sarah Thomas,
User Rank: Blogger
3/11/2014 | 11:09:21 AM
Re: pricing
It's a good marketing tool and is the really the one big advantage Sprint can claim over its competitors, but I wonder if it will start to hurt them financially, if not capacity-wise. They have to balance it against profitability. I bet we'll see them continue to introduce tiers, but always have unlimited as the more expensive choice. I wonder if Sprint employees really push customers away from doing unlimited.
kq4ym
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kq4ym,
User Rank: Light Sabre
3/10/2014 | 6:08:52 PM
Re: pricing
In the current market it might be a safe guess that unlimitied is the way to go. Building that capabiliity to add and service exisiting and new customers is always going to be some sort of gamble, as other networks try different business plans. Sprint, if lucky may just come out where they planned.
Sarah Thomas
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Sarah Thomas,
User Rank: Blogger
3/10/2014 | 4:11:19 PM
pricing
Good to hear Sprint is holding on to unlimited, even as its competitors repeatedly shake up their pricing strategies, with the latest coming from AT&T over the weekend.

Euteneuer also said Sprint's Framily plans, which include an unlimited option, are doing really well fo it. But, he said it's too soon to see if there's a correlation between Spark markets and Framily uptake.
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