Amid all the shots fired in the current mobile price wars, Sprint appears to be shooting itself in the foot more than its competitors.
A new survey from Cowen and Co. reveals that Sprint average revenue per account (ARPA) fell 14 percent from $153 per month in the fourth quarter to $132 per month in the first quarter. Cowen analyst Colby Synesael tags Sprint’s “cut you bill in half” promotion as the culprit.
Sprint’s plummeting ARPA stands out among the mixed account revenue shifts of its competitors. Verizon’s ARPA also fell, down five percent quarterly. But AT&T’s mostly stayed flat and T-Mobile saw its ARPA jump to $121, up from $116 in the fourth quarter.
Additional adverse financial effects could be heading for Sprint’s ledger soon as the carrier just recently announced a promotion to cover all costs for customers willing to switch, including device financing balances.
T-Mobile followed suit with a similar offer.
In more bad news, the Cowen survey, which reached out to 1,000 consumers, also found that Sprint had an abnormally high amount of customers preparing to jump ship. Of Sprint customers whose contracts were coming up in the next six months, 24 percent planned to switch to another carrier. Cowen puts the industry average at 13 percent.
The high potential churn for Sprint could be due to the carrier straggling behind AT&T, T-Mobile and Verizon Wireless with its network.
During its most-recent earnings call, Sprint said its LTE network now covers 270 million POPs and that its 2.5 GHz LTE deployment is up to 125 million POPs. The carrier also recently announced plans to launch LTE-Advanced carrier aggregation in Chicago.
Sprint’s network moves come as AT&T and Verizon continue to dominate in terms of coverage and as T-Mobile is planning to add another 1.6 million square miles of network coverage in 2015.
Sprint’s coverage concerns may have contributed to the carrier losing another 205,000 postpaid phones and recording a higher churn rate of 2.3 percent in the last quarter.
Filed Under: Carriers
