Sprint Corporation (S) is now offering smartphone upgrades every 12 months under its One Up program. The new smartphones bought under this program can be paid for on an installment basis, with services including voice, text and data at reduced price. However, this discounted facility will only remain valid until the installments are paid.
With the new early upgrade program, Sprint joins the bandwagon of carriers like AT&T, Inc. (T), Verizon Communications Inc. (VZ), and T-Mobile US, Inc. (TMUS). The companies have adopted this strategy to attract more customers toward smartphone upgrades, and thereby increase the sale of services and equipment.
Sprint’s early upgrade offer is available to customers (new or existing) using Sprint’s unlimited plans including My Way and My All-in plans. The company is providing its monthly unlimited plans at $65 for One Up subscribers, which is $15 less compared to standard rates for unlimited plans.
Apart from early upgrades, Sprint is focusing on revenue growth in its core platform business. Sprint is working on increasing the penetration of smartphones, iPhone in particular. Moreover, its $10 data premium plan is accelerating post-paid wireless subscriber growth and average revenue per user (:ARPU) with an improving churn rate.
With regard to prepaid, Sprint’s brands such as Boost Mobile, Assurance Wireless and Virgin Mobile as well as innovative offers like $50 Monthly Unlimited plan with Shrinkage, Beyond Talk plans and Broadband2Go are making significant contribution to its subscriber growth.
However, given more than 95% U.S. wireless penetration, competition is likely to remain intense, which could pressure top and bottom-line results as carriers compete for market share. Although Sprint has started reducing its net loss in the post-paid subscriber base, we remain concerned about the return of this trend in the future.
If this trend does not continue, revenues from Sprint’s wireless segment will come under pressure once again as it was in the past several years. The decline in Sprint’s post-paid customer base is primarily due to intense price competition, ineffective marketing, less favorable network quality and delays in integration of back-office functions with its acquired Nextel unit.
Sprint currently has a Zacks Rank #3 (Hold).
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