Sprint to Offer Wireless at Half Price of Rivals
November 18 2015 - 4:40PM
Dow Jones News
Sprint Corp. took a swing in the wireless price war Wednesday,
offering to sell wireless service at half the price of rivals, a
move that shows the urgency the carrier feels to grow its
subscriber base.
Until Jan. 7, any customer who switches to Sprint will be able
to pay half price of the plans currently offered by their existing
carrier, and Sprint will cover up to $650 in switching costs. For
its own customers, Sprint is offering a free tablet and a free year
of data service for signing a two-year contract.
Sprint Chief Executive Marcelo Claure said the aggressive offer
demonstrates the confidence the company has in its improved
network. The carrier says 77 U.S. markets are now covered by faster
connections, which the carrier has dubbed "LTE Plus."
"Our network has come a long, long way," Mr. Claure said. "It
has never performed better than it's performing today."
But the deal comes at a vulnerable time for Sprint, which has
lost millions of customers in the last few years as it overhauled
its wireless network. This year the carrier is burning through cash
and is in the midst of a $2.5 billion cost-cutting program. In the
most recent quarter, it lost $585 million while revenue fell
6%.
It is the latest promotion to drive down pricing as the
country's biggest wireless carriers struggle to find new growth in
a saturated market. Shares of the company fell more than 8% in
recent trading to $4.04. The stock is down 2.7% so far this year
Sprint's network quality has improved after a major overhaul,
slowing customer defections significantly. In the recent quarter,
it added 237,000 of the most lucrative postpaid phone customers,
but most of those additions had been customers on one of Sprint's
prepaid brands.
The promotion comes a week after T-Mobile said it would allow
customers free, unlimited streaming of low-quality video from two
dozen apps. Sprint said its half-price offer won't include those
unlimited features, and it also won't offer half price on
T-Mobile's $95 unlimited data plan.
The offer means Sprint will have to keep track of the rate plans
for its rivals, which could make things complicated for employees
at its several thousand retail locations. Mr. Claure said the new
plan would actually make things easier for retail sales staff
because his competitors' wireless plans have gotten more
simple.
A year ago, Sprint launched a similar promotion that offered
half price wireless service to people switching from the nation's
two largest carriers, AT&T and Verizon. In that deal, Sprint
charged half the monthly service price of what customers were
currently paying, resulting in thousands of different billing
combinations the carrier had to manage.
The new deal doesn't take into account what customers are
currently paying—it is just half price of what other carriers are
currently selling. Customers who switch can only choose from plans
offered by their current carrier. For instance, a Verizon customer
can choose to pay half price for any current Verizon plan, but not
T-Mobile plans. Customers get the pricing until January 2017.
Write to Ryan Knutson at ryan.knutson@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
November 18, 2015 16:25 ET (21:25 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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