Sprint in the third quarter managed to pull off some healthy postpaid metrics, raking in 344,000 net postpaid net additions, $8.25 billion in net operating revenue, and $7.85 billion in wireless net operating revenues.
But lurking beneath that was another, less publicized metric: prepaid net losses totaling 427,000. And critics were quick to pounce, questioning the reliability of Sprint’s turnaround narrative in an environment that increasingly looks at prepaid and postpaid as a combined picture rather than separate entities.
It seems, however, Sprint is keenly aware of that figure.
Sprint CFO Tarek Robiatti addressed the carrier’s plans for prepaid at an investor conference on Monday, noting that market is a very competitive one and Sprint is planning a comeback. But, he said, prepaid isn’t just about subscriber numbers.
According to Robbiati, a very successful competitor has a prepaid churn rate between 3 percent and 4 percent, which he said means “the customer base of our competitor washes out, or half of it washes out, almost every year.”
“This isn’t about customer numbers. This is really around driving revenue and being very selective around the customers you acquire to make sure the customer investment that goes into driving the growth in prepaid is not inefficient,” Robbiati said.
Robbiati said there is “no silver bullet” to fix its prepaid standing and noted it will likely “take a bit of time” to see any changes, but indicated there is a plan.
“It’s a combination of revamping the value proposition, revamping the branding, revamping the distribution, revamping also our ability to be selective in segmenting and targeting customers that will get us there,” Robbiati said. “This will take a few quarters to play, but we are resolute that we’re going to be turning around our prepaid business because as my boss says, as Marcelo says, there’s no point in taking two steps forward in postpaid to have dilution in services and revenue growth in prepaid.”
Sprint’s move to revitalize its prepaid services comes amid a broader industry shift to get serious about prepaid and treat pre- and postpaid as two parts of one whole.
In the third quarter, dominant prepaid players T-Mobile and AT&T’s Cricket and GoPhone brands raked in 684,000 and 304,000 prepaid net additions, respectively.
Last month, longtime prepaid slacker Verizon also put on its game face with the addition of new prepaid tiers offering 5 GB of data for $50 per month and 10 GB of data for $70 per month – targeting subscribers in T-Mobile and Cricket’s most popular buckets.
Back in July, Sprint shifted the headquarters of its Virgin Mobile prepaid brand from New Jersey closer to home in Kansas City ahead of plans for a relaunch.
Sprint hasn’t yet given any details of what the Virgin Mobile makeover will entail – and Robbiati didn’t say Sprint’s prepaid makeover would include the brand – but the carrier has noted the changes at Virgin will “challenge the status quo by providing services beyond just talk, text, and data access” and “launch groundbreaking, best-in-class services.”
Does Sprint have what it takes to go head to head with T-Mobile and Cricket? We’ll have to wait and see, but it’s clear they’re not giving up without a fight.
