Sprint, RadioShack Shack-Up Looks Inevitable

If I had to guess what tune is playing around Sprint these days, I'd go with "The love shack is a little old place where we can get together..."

Rumors surfaced this week that electronics company RadioShack, on the brink of bankruptcy, would sell 1,300 to 2,000 of its 4,000 stores to Sprint Corp. (NYSE: S) and shutter the rest.

Speaking on the carrier's third-quarter earnings call this morning, Sprint CEO Marcelo Claure said he could not comment on the speculation directly, but what he did say made it clear a deal between the two was inevitable -- or at least should happen. (See Sprint Plans to Meld TDD, FDD LTE Spectrum.)

Sprint's three fundamental principals for attracting customers, as outlined by Claure since day one on the job, are a great network, compelling offers and distribution. While it's actively working on the first two, distribution has been lacking. (See Sprint CEO: Price Cuts First, Best Network Next .)

Claure said Sprint has 3,000 fewer stores than Verizon Wireless and AT&T Inc. (NYSE: T) and 500 to 600 fewer than T-Mobile US Inc. Sprint, he said, needs to open at least 500 stores this year and is looking at many different opportunities to do so.

"Distribution growth is needed to continue to attract more customers to the Sprint brand," he said.

Read more about mobile strategies on the 4G LTE channel here on Light Reading.

Sprint has also seen an uptick in foot traffic to the retail stores it does have, up 10% in the third quarter over last year, so its need for a bigger presence is quickly growing. Claure said many came in to Sprint stores to cut their bill in half, but ended up taking other plans. Sprint will focus on highly targeted, customized offers for its customers this year, he said, in a bid to reduce churn, which came in at 2.3% this quarter. (See Sprint & T-Mobile CEOs Tweet-Battle Over Super Bowl Ads.)

Sprint is certainly trying to make a bigger splash with its aggressive promotions, screaming goats and network upgrades. I imagine a flashy flagship store akin to Apple Inc. (Nasdaq: AAPL)'s, and now AT&T and Verizon, is on its radar as well. Online hasn't trumped retail entirely, it's just upped the game for everyone, wireless operators included. (See Pics: Verizon's Chicago Destination Store and Photos: AT&T's New Chicago Playland.)

As for the other big Sprint rumor of the month -- that Google (Nasdaq: GOOG) is launching a wireless service over Sprint's network -- that was also a no comment from Claure. The two are bound by confidentiality agreement, he said, another statement you might want to interpret to mean it's definitely going to happen soon... (See Verizon Ready for Google MVNO Challenge and Republic Welcomes More WiFi-First Action.)

— Sarah Thomas, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Editorial Operations Director, Light Reading

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Mitch Wagner 2/5/2015 | 10:01:15 PM
Love Shack Gratuitous embedded video.


MordyK 2/5/2015 | 9:38:25 PM
Alternative ending To my mind Radio Shack was in the perfect place at the perfect time but couldn't execute and capitalize on it.

In this new era of connected devices many of which are not directly connected to cellular networks, there's a need for a central place for customers to learn and get help with their attepts at adopting the connected experience.

Imagine for one an Apple store like experience where you can see a connected home/life as a museum gallery and get an education and help in setting up these devices.

The selling opportunity and genius bar like revenue from supporting non radio shack originating devices would be enormous.

Personally I don't understand why Google hasn't adopted this retail model for ANdroid or Apple's neglect in their stores of the connected ecosystem.

To Radio Shack: My fond childhood memories, RIP!
Joe Stanganelli 2/5/2015 | 7:24:12 PM
Re: The whole shack shimmies My biggest complaint about RS was the quality of their products.  I had purchased a number of less-than-satisfactory devices from them over the years.

Of course, RS was a heaven-send for simple things like converters and whatnot.
Joe Stanganelli 2/5/2015 | 7:22:07 PM
Re: RIP RadioShack There are rumors/reports that Amazon is considering entering the bidding for RadioShack stores, as well, as a way of bolstering its brick-and-mortar operations.  It would be interesting.
jasonmeyers 2/5/2015 | 3:08:48 PM
Re: The whole shack shimmies I've seen a number of complaints about that same thing -- I didn't know (or didn't remember) they did that. Or maybe they didn't in the 80s, when I was last a customer. 
mendyk 2/5/2015 | 2:58:17 PM
The whole shack shimmies I wonder if they will ask for your phone number if you buy batteries from them, the way they used to do at the Shack.
jasonmeyers 2/5/2015 | 12:39:47 PM
Re: Shack shock If the store locations are leased then I assume that's what Sprint would do -- take over the lease. 
brooks7 2/5/2015 | 12:28:43 PM
Re: Shack shock So why would you "buy the stores" which are probably leased (my closest Radio Shack is) instead of taking over some leases and buying inventory of Sprint phones? seven
jasonmeyers 2/5/2015 | 12:06:05 PM
Re: Shack shock If riding my bike to RadioShack to buy blank cassette tapes when I was 14 makes me a resident expert, then I am indeed an expert.

I think it's pretty clear that Sprint's interest is a real estate play, as you point out, and it's just a matter of how many stores Sprint actually needs or wants. I don't see any other value in RadioShack beyond location, location, location. 

On that note, our fearless editorial leader Ray Le Maistre (or "Ray the Master," as he requires us to address him) floated the theory that perhaps Sprint would use old Radio Shack locations to locate small cells and improve its wireless coverage. I flagrantly co-opted that theory and made it my own in the NPR interview, but it didn't make the cut. Too complex for public radio, I can only assume. 
sarahthomas1011 2/5/2015 | 11:41:22 AM
Shack shock Maybe our resident Radio Shack expert Jason Meyers can weigh in... http://kcur.org/post/sprint-rumored-be-talks-buy-radioshack-stores
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