Sprint CFO: 'Room' for More Price Cuts in US

Think that the prices of 4G data plans in the US can't be slashed further? Well, look beyond American shores and think again, says Sprint's new CFO.

Talking at the Bank of America Merrill Lynch 2015 Leveraged Finance Conference on Friday, Sprint Corp. (NYSE: S)'s Chief Financial Officer, Tarek Robbiati, didn't directly say that Sprint would go further in price cutting, but he didn't rule it out either.

"Look at the US wireless market, it's the biggest one in the world by value, and the reason why it is... is because you have 300 million people and very, very high ARPUs [average revenues per user], so there is headroom," Robbiati said.

"In Hong Kong you can get very, very decent 4G data packages on 4G networks for less than $5, which is extraordinary," Robbiati continued, chuckling. "This is real priced-based competition, we haven't felt it here yet."

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The CFO's statement came after he was asked about how successful Sprint's new half-price offer has been so far. "It's just a promotion and not necessarily a strategy," Robbiati stressed without giving any details on specific numbers. (See Sprint Undercuts Rivals With Half-Price Offers.)

He made no bones, however, that the promotion is aimed at stealing customers from Sprint's rivals. "In 2014, we lost in excess of 1.5 million customers, so we have to at least add back that number and more and we will," the CFO says.

Sprint, of course, is also trying to shave $2 billion off its costs by the end of fiscal 2016, which falls in March 2017. The CFO reiterated that this goal is "very achievable," especially as Sprint's operating expenses currently amount to about $26 billion annually. (See Sprint, Verizon Face Reorganization, Job Cuts.)

"There isn't one specific area where we're taking costs out... We're cutting across the P&L," says Robbiati. This will include IT, legal, corporate, human resources, general and administrative and cuts in real estate costs.

"Quite frankly we have to... with $32 billion of debt, we have to do something," says Robbiati.

The CFO even appeared to take a pot shot at Sprint's NASCAR sponsorship. The 13-year-old deal is due to end after the 2016 racing season anyway.

"One thing that has always struck me in the few telcos I've been to is that there is a love for fast cars all the time," the CFO stated. "There is no correlation between fast cars and the branding of a network -- just doesn't make any sense."

— Dan Jones, Mobile Editor, Light Reading

kq4ym 12/14/2015 | 8:12:00 PM
Re: Gouge away? I've always wondered about those race car tie ins, it also seemed to me there's "no correlation between fast cars and the branding of a network," but those races certainly get lots of eyeballs every week. Now if consumers saw a Sprint offer of $5 on those speeding cars maybe that would generate some real buzz and at least start a downward trend for U.S. prices to bring them in line with those $5 Hong Kong rates!
DanJones 12/9/2015 | 12:01:21 PM
Re: Gouge away? Yeah, can they do more with less?
DanJones 12/9/2015 | 12:01:20 PM
Re: Gouge away? Yeah, can they do more with less?
KBode 12/7/2015 | 1:10:44 PM
Re: Gouge away? How do you balance having employees "manage their own trash" and killing free executive trash with expanding a lagging market while at the same time cutting prices? Some of the Wall Street worry seems silly (since I guess Sprint's spending is in line with everybody else), but some of it seems warranted.
DanJones 12/4/2015 | 2:55:55 PM
Gouge away? Wouldn't Wall Street spank Sprint if it did slash prices? There again, hard for Sprint to please Wall Street right now whatever.
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