Sprint Corporation (S) will offer free services to students in the U.S. as part of it promotional strategy to capture more market share. The company, in collaboration with Best Buy (BBY), is offering free network service for up to one year to high school and college students. Sprint is expected to gain this strategy that will likely increase its smartphone sales and capture the untapped market of students unable to afford other services.
To avail the new promotional offer, students have to buy phones at the student activated price and sign up for free services including unlimited talk, text and 1GB of data on smartphones. In addition, students can avail unlimited data services for just $10 a month, excluding additional charges. These offers are available at all Best Buy and Best Buy Mobile stores.
We believe that the new promotional strategy will add to the company’s subsidy burden, already heavy with Apple Inc.’s (AAPL) iPhone subsidy. Simultaneously, it ensures a meaningful revenue stream in the future. As the technology progresses, it will attract more teenagers toward usage of data services and that would also entail increased penetration of smartphones. Since Sprint is already making efforts to tap this market through its lucrative offers, it will try to lead this target market with an array of customized and affordable services.
Sprint is also focusing on revenue growth in its core platform business. Sprint’s multi-brand like Boost Mobile, Assurance Wireless and Virgin Mobile as well as innovative offers like $50 Monthly Unlimited plan with Shrinkage, Beyond Talk and Broadband2Go are contributing significantly to subscriber growth.
In the third quarter, Sprint registered growth in its service revenues thanks to the introduction of new pricing plans such as Unlimited, My Way and My All-In plans that include unlimited talk, text and data. In addition, the company has also gained from its plan, Sprint One Up, which offers unlimited talk, text and data along with smartphone upgrade every 12 months.
Sprint, which operates with mega carriers like Verizon Communications Inc. (VZ), has a Zacks Rank #3 (Hold).