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Sprint’s Churn Rate Improves in 1Q15

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Sep. 10 2015, Updated 5:06 p.m. ET

Network performance and churn rate in 1Q15

Previously in this series, we observed that Sprint Corporation’s (S) YoY (year-over-year) network performance improved in 1H15, based on the RootMetrics Mobile Network Performance in the US report for 1H15.

The top four US wireless carriers are Verizon Communications (VZ), AT&T (T), T-Mobile (TMUS), and Sprint. Sprint’s call performance ranking improved in 1H15, compared to 2H14 and to 1H14. Network performance has a key impact on a wireless carrier’s customer retention.

In this part of the series, we’ll look at Sprint’s churn rate in the postpaid segment, which decreased significantly in 1Q15.

Sprint’s churn rate of postpaid customers declined from ~2.05% in 1Q14 to ~1.56% in 1Q15. As the chart above shows, Sprint’s churn rate also decreased sequentially from ~1.84% in 4Q14.

According to the company, better network performance was one of the key factors responsible for the improved churn rate during the June quarter.

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Sprint’s churn rate against peers

Sprint’s churn rate remained the highest among the top four US wireless carriers in the June quarter. Verizon had the best customer retention during 2Q15, with a postpaid churn rate of  ~0.9%. AT&T followed Verizon with a postpaid churn rate of ~1.01%, and T-Mobile’s postpaid phone churn rate of ~1.32% was also better than Sprint’s during that quarter.

You may get a diversified exposure to Sprint by investing in the iShares Dow Jones US Telecom ETF (IYZ), which held ~3.3% in Sprint on July 31, 2015. If you want to diversify even further, consider investing in the iShares Russell 1000 ETF (IWB). Sprint made up ~0.01% of IWB’s holdings on the same date.

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