Sprint Corp (NYSE:S) Reports Improved Growth Because Of Aggressive Discounts


Sprint Corp (NYSE:S) gambled that users would ignore its reputation for poor service if that meant saving money. It has improved its network and service, but the perception remains that it trails competitors such as Verizon Communications Inc. (NYSE:VZ) Wireless, T-Mobile US Inc (NASDAQ:TMUS) and AT&T Inc. (NYSE:T).

The company in November promised to halve the phone bill for folks switching from a competitor. The move was like a program Sprint introduced in 2014, but included T-Mobile and was in response to specific competitor’s plan.

Sprint, the country’s fourth-largest wireless carrier was one among several carriers giving discounts during the holidays. As the wireless business reaches maturity, carriers are ready to offer substantial deals to attract customers.

The organization added 491,000 users in its fiscal third quarter. More significantly it added 501,000 postpaid subscribers the biggest growth in four years. These higher-credit users are generally willing to pay more and are more loyal as well as highly valued by the carriers. This is just the second quarter in over two years that the company added postpaid customers.

Shares in the American mobile carrier rose by over 15% on Tuesday after the organization reported its second consecutive quarter gains in the most lucrative mobile phone users.

The company that has tried to limit customer losses by participating in a costly price war reported a gain of 366,000 postpaid phone users during the third quarter. This was a considerable improvement from a year ago when it dropped 205,000 of these customers.

An analyst with Gartner, Bill Menezes, said that even though Sprint had to resort to heavy promotional price reduction, it posted healthy results where it mattered by adding postpaid phone users. The net postpaid adds numbers seem to say Sprint’s pricing has persuaded several customers to give it a trial and the churn number says its holding on to existing users a major improvement over the trend of the past two years.

A mobile analyst with Current Analysis, Avi Greengart said while Sprint declared heavy growth in postpaid wireless users, it also reported a big drop in prepaid wireless users. He wrote that should result in much higher profitability except that the postpaid gains have been because of aggressive discounts of upto 50%.