Sprint (NYSE:S) Likely to Purchase Wireless Start-Up FreedomPop

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Sprint Corporation (NYSE:S), which is now owned by Japan’s Softbank, is a struggling wireless player company in the U.S. Sprint (NYSE:S) is said to be having talks with Los-Angeles based wireless start-up about a possible deal, which might help Sprint (NYSE:S) to generate revenue growth and help the company in easing its subscriber-acquisition costs. This news was shared by two different sources that are familiar with the talks. The talks seem to be decisive in nature that might lead to the purchase of the.

There are other companies interested in FreedomPop, and amongst them is a U.S technology company and a smaller wireless carrier.

The acquisition of FreedomPop will place it at a value range of $250 million to $450 million, while an investment will place it to the value of almost $200 million. The spokespersons for both Sprint (NYSE:S) as well as FreedomPop refused to comment on the details of the deal.

The new CEO of Sprint (NYSE:S), Marcelo Claure is the one who is responsible for making efforts for the ongoing talks between the two companies. Claure wants to reboot the company’s growth and investment strategy after the merger that took place earlier this year between the U.S regulators with T-mobile (NYSE:TMUS).

Claure said in a conference call that Sprint (NYSE:S) was at its weakest, in terms of market share and subscriber losses. The company is on its way to lose 2 million of its customers this year.

Sprint (NYSE:S) lost 4% of its high-end users to its rival companies by the end of the nine months in September. Both its pre-paid and postpaid customers declined.

The price war between companies began when T-mobile (NYSE:TMUS) cut Sprint (NYSE:S)’s pricing on standard wireless plan to $60 a month, and then came up with a $50 plan which resulted in an unlimited data for iPhone 6 users.

Due to the competition in the prices, Sprint (NYSE:S) saw a year-over-year revenue growth of 9.5%.

The stock lost half its value this year, and in the summer of 2013, Softbank’s $21.6 billion Sprint (NYSE:S) investment dipped by just over 10%.

Claure said in a conference call that the company is aiming at regaining its postpaid phone revenues because that’s where the profits lie. FreedomPop has been gaining wireless subscribers with plans as cheap as $5 a month and a peer-to-peer platform for trading minutes. Sprint (NYSE:S)’s that started as a wireless hotspot provider gains 95% of its subscribers online, making its acquisition cost per customer to be $4.

FreedomPop is looking for converting 50% of its free consumers into paying customers. The two companies have had a partnership for more than a year, with Sprint (NYSE:S) pitching in thousands of the start-ups users on its wholesale wireless network.

The company said that earlier this year FreedomPop hired Raine Group as its strategic advisers. On Wednesday, the company will disclose a plan to offer 100 hours of international calling that will be free of cost, which means that there will be no roaming fee involved globally.

 

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