After some very early success with its partnership with Spotify, Sprint is planning to offer additional bundled content add-ons to eke more value out of its installment billing and "Framily" plans.
Speaking Monday morning at the JP.MorganChase Global Technology, Media and Telecom Conference, Sprint Corp. (NYSE: S) CFO Joe Euteneuer told attendees that he wants to bring more types of content to the forefront for Sprint customers and offer them as add-ons to their data plans.
The offers would look similar to the deal Sprint struck with Spotify last month that Euteneuer said has done really well in its first two weeks. Sprint helps market and promote Spotify and offers the music service free to those customers on a Framily plan for up to six months, followed by a discounted rate of $7.99 per month after that if the Framily has less than five people in it and $4.99 if it has six to 10 members. Euteneuer said this type of flexibility in billing "establishes the foundation of where we're going to go forward." (See Sprint Launches No-Sharing 'Framily' Plans.)
The carrier also offers installment billing, which has caused its service ARPU to go down, but device revenue to grow. The CFO suggested bundled deals like the Spotify offer will help it make up some of the service revenue its losing from installment billing, which 29% of its customer base now uses. (See Sprint Reports Q1 Loss of $151M.)
"The most important piece of installment billing is, one, customers are now paying for their phones 100% over 24 months, and we have eliminated the subsidy, which has a big help to the bottom line," Euteneuer said, adding that Sprint will "then continue to create value through other Spotify type offers."
Future content deals will likely branch out from music, but interest in mobile music has been growing lately, making it a good place to start. Apple Inc. (Nasdaq: AAPL) is reportedly acquiring Beats, which is a partner to AT&T Inc. (NYSE: T). Analysts believe the deal could spur more M&A and action in the mobile music space. (See Apple Buying Beats for $3.2B: Dr. Dre & Tyrese.)
— Sarah Reedy, Senior Editor, Light Reading