In 1Q15, retail sales for Sprint Corporation (S) were 7.3 million compared to 6.3 million in 1Q14 and 7.9 million in 4Q14, as seen in the below chart. The 16% increase year-over-year (or YoY) was mainly attributed to higher prepaid sales and higher postpaid upgrades.
Postpaid device financing rate
While the device financing rate was 64% for 1Q15 compared to 28% for 1Q14 and 53% for 4Q14, the leasing take rate increased to 51% of sales compared to 37% in 4Q14. For the quarter ended June 30, 2015, 31% of total postpaid connections were active on a device financing agreement, with 16% on leasing and 15% on installment. The upgrade rate stood at 7.9%, 7.2%, and 7.5% for 1Q15, 1Q14, and 4Q14, respectively.
Smartphone sales comprised 97% of total phones sold in 1Q15, an increase of 2 percentage points YoY. Overall, smartphones represented 89% of the 24.9 million phone connection base.
Long-term evolution (or LTE) devices comprised 77% of the 30 million ending connection base, compared to 55% in 1Q14. Sprint’s CEO is of the opinion that the firm’s network performance will match or exceed Verizon (VZ) and AT&T (T) in the next eight quarters.
Focus on distribution networks
In order to take advantage on its recent momentum and customer acquisition, Sprint is now focusing heavily on expanding its retail distribution network and closing the gap with competitors. The total retail footprint for Sprint spans across 4,500 locations in the United States.
Sprint RadioShack Stores: There are 1,435 co-branded stores open, and the “store within a store” model has been completed in 25% of the locations. The remaining stores are expected to be completed by the end of 2015.
Sprint Direct 2 You: This is a unique service where a Sprint expert helps a customer to set up a mobile device at any location the customer chooses for free. It is available in all major cities of the United States, including Chicago, Dallas, Denver, Kansas City, Los Angeles, Miami, New York, San Francisco, Tampa, and Washington, D.C.
Dixon’s Carphone: Sprint has entered into a commercial contract with Dixon’s Carphone to build and operate 20 new Sprint stores in select US markets with a significant scope of expansion. Dixon’s Carphone is a European consumer electronics retailer known for innovation in wireless retail sales.