Friday, February 20, 2009

Rumors of Sprint's Death Have Been Somewhat Exaggerated

At one time Sprint, now Sprint Nextel (S), was the content thought leader among US carriers and the data ARPU darling. They had a robust, community oriented games deck, innovative music apps and they were the first carrier in the world to stream full length movies over a 3G network. But their 2005 decision to merge with Nextel, which used an incompatible network technology and had a totally different customer base, proved to be an unmitigated disaster. One of the biggest problems was that in an effort to make the Nextel acquisition feel more like a merger management failed to retain many of the key people that had made Sprint a mobile content powerhouse. Frankly, the train has been off the tracks for the last couple of years. They have taken a substantial hit to their customer base, first losing many of their Nextel customers, and more recently core Sprint the benefit of Verizon Wireless and AT&T Mobility. In their 2008 earnings statement this week they announced they had lost 4.5mil customers during 2008, leaving them with 49.3mil subs. Revs were down 11% from 2007 to $35.6bil with a Net Loss of $2.8bil. But there seems to be some light and the end of the tunnel and many, including myself, think Sprint could be poised for a bit of a comeback in 2009. Here are the factors that could help turn things round at the #3 operator:
  • Overall Data ARPU is still strong, in 2008 it was $14.50 and CDMA (core Sprint subs) Data ARPU was $17.75 or 31% of total ARPU...that's substantially better than the $13.99 from Verizon Wireless and $13.50 from AT&T Mobility
  • Sprint has an exclusive partnership with Palm for the launch of the Pre...which has the potential to be a rockstar handset
  • CEO Dan Hesse has promised to improve Sprint's infamous and much maligned customer service
  • Sprint's 4G WiMax rollout (in partnership with Clearwire & Intel) is at least a year ahead of Verizon's 4G LTE initiative, with deployments live in Baltimore and Portland
  • Sprint launched Sprint Open Software Platform at the end of last year to help developers expedite the delivery of new services and applications
  • Sprint continues to field a solid range of data friendly handsets (including a planned Android device) and have the cheapest premium data plans
All this said, 2009 is a critical year for Sprint if it's going to continue as an autonomous wireless operator. They must continue to cut costs and pare inefficiencies while maintaining investment in the infrastructure (to keep it's data users happy) and elevating it's battered brand profile...all in the shadow of a super-rough economy, in a totally saturated market. No small task for Mr. Hesse.

No comments:

Post a Comment