High-quality postpaid phone gross additions
In the last part of this series, we learned that Sprint’s (S) gross customer additions increased both sequentially and YoY (year-over-year) during fiscal 3Q14. Now, we’ll focus on Sprint’s postpaid phone gross additions as well as the quality of its customers during the quarter.
Apart from attracting new customers, wireless telecoms have to look at the quality of the acquired customers. High-quality customers usually contribute to more customer lifetime value. Therefore, these telecoms specifically try to acquire these customers.
Sprint has been working on the quality of its customers, particularly after its CEO, Marcelo Claure, took office in August 2014. He expressed his focus on acquiring high-quality customers at different earnings’ conferences and industry events. According to Claure, the quality of the company’s postpaid phone customers is improving.
If you want diversified exposure to Sprint, you can invest in the iShares U.S. Telecommunications ETF (IYZ). IYZ held ~4.6% in the telecom on March 5, 2015. The ETF also held ~24.5% in Verizon (VZ) and AT&T (T)—the largest US telecoms. Both of these telecoms are also held by the Technology Select Sector SPDR Fund (XLK).
Postpaid phone customers
Sprint’s postpaid phone gross additions increased by 20% YoY during fiscal 3Q14. As you can see in the above chart, the company’s prime customer base in the segment also increased YoY during the quarter.
According to Sprint, the customer additions during the quarter had three times the customer value than fiscal 3Q13. These prime customers have a variety of benefits for Sprint. Prime customers using multiple lines are cost-effective. They require less customer support. Also, they help the company manage customer attrition.