Apparently one of Sprint's resolutions for the New Year is to clean house in its prepaid business. The carrier quietly announced that it is going to shut down its prepaid Virgin Mobile USA brand and move all of its Virgin customers onto its Boost prepaid brand starting next month.
"We regularly examine our plans to ensure that we're offering the best services in line with our customer needs. Beginning on the week of Feb. 2, we will be moving Virgin Mobile customer accounts to our sister brand Boost Mobile -- consolidating the brands under one cohesive, efficient and effective prepaid team," Sprint wrote in response to Light Reading questions on the topic. "In most circumstances, customers can keep their current phone and will receive a comparable or better Boost Mobile service plan with no extra cost."
On its Virgin website, Sprint said it began alerting its Virgin customers about the action in "early January" and that it will begin moving those customers to Boost in February -- giving affected customers roughly 30 days to digest the news.
"In most instances, you will keep the same phone and phone number, and you will be transferred to a comparable service plan at no extra cost to you. In fact, since Boost Mobile accounts have taxes and fees included, customers will end up paying less than you do now on similar plans," the operator noted, though it did warn that a number of services including the ability to use PayPal for payments would be discontinued.
At least one analyst said that Sprint's decision to kill its Virgin brand is not a surprise. "It has been clear that Boost Mobile is Sprint's primary focus in the prepaid wireless segment for a while and this move is no surprise. Virgin Mobile USA became an afterthought in many consumers' minds and has been a distraction dragging on Sprint's prepaid results," said Tammy Parker, an analyst with research and consulting firm GlobalData, in a statement.
Parker pointed to Sprint's attempt in 2017 to remake Virgin Mobile as an iPhone-only carrier as the beginning of the end for Virgin. "By the time this dubious experiment ended in August 2018, Virgin Mobile had alienated its existing Android customers, and the fact that it continued selling Android devices despite its stated iPhone-only strategy confused potential customers, all of which caused irreparable damage to the brand," Parker said.
As noted by Mobile World Live, billionaire Richard Branson's Virgin brand entered the US mobile market as an MVNO in 2002 led by then CEO Dan Schulman (who is now the chief executive of PayPal). Virgin Mobile USA conducted an IPO in 2007 but was acquired by Sprint in 2009 for just under $500 million.
Virgin isn't the first prepaid brand to fall under Sprint's knife. For example, the carrier shuttered its Common Cents prepaid brand in 2011.
It's unclear exactly how many customers will be affected by Sprint's decision to shutter its Virgin Mobile brand; the operator doesn't disclose such information. Sprint reported 8.4 million total prepaid customers in its most recent quarter, which represents a decrease of around 600,000 prepaid customers over the course of the past year or so. The remainder of Sprint's 54 million total customers stretch across its postpaid and wholesale businesses.
Sprint operates a total of three prepaid brands: Virgin, Boost and Assurance Wireless, which is primarily designed to offer wireless service to low-income Americans under the government's Lifeline program. "Boost Mobile primarily serves subscribers that are looking for value without data limits," Sprint explained in a recent SEC filing. "Virgin Mobile primarily serves subscribers that are looking to optimize spend but need solutions that offer control, flexibility and connectivity through various plans with high speed data options."
The Sprint merger with T-Mobile
Sprint's decision to eliminate its Virgin brand comes at an inauspicious time for the company. Lawyers for Sprint and T-Mobile are scheduled to give their final arguments next week in a court case seeking to block the proposed merger on the grounds that it will reduce competition in the wireless space.
As part of the Justice Department's approval of the proposed merger this summer, Dish Network agreed to acquire 9.3 million Sprint prepaid customers stretching across the operator's Virgin, Boost and Sprint Prepaid brands (the Sprint Prepaid brand, also called "Sprint Forward," was folded into the Boost brand last year). However, Dish clearly appeared mostly interest in Sprint's Boost brand, considering Dish generally referred only to the Boost brand in its discussions of the transaction.
It's unclear how Sprint's decision to shutter its Virgin brand will affect its efforts to merge with T-Mobile and, concurrently, offload its prepaid customers to Dish Network. The companies are now waiting for the judge in the trial against the merger to render his verdict, which is expected sometime next month.