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Sprint’s Churn in Fiscal 1Q15 Was Its Lowest Ever

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Claure on Sprint’s churn

Earlier in this series, we learned about shrinking postpaid phone net losses of Sprint (S) in the recent quarters. Now we will look at Sprint’s customer retention.

During the Goldman Sachs Communacopia Conference held on September 17, 2015, Sprint’s CEO, Marcelo Claure, highlighted the significant improvement in Sprint Platform’s postpaid churn in fiscal 1Q15 compared to that in fiscal 3Q14.

During the conference, Claure said, “So we worked real hard in order to lower it to 1.56%. And 1.56%, even though it’s still the worst in the industry, there’s two things that are quite relevant. One, it’s one of the largest, it’s actually the largest drop in Sprint’s history, going from 2.30% to 1.56% in two quarters. But it is in the 19 years of Sprint history, this has been the lowest churn ever.”

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How was Sprint’s churn among the top four US wireless carriers?

In the US, the top four US wireless carriers are Verizon (VZ), AT&T (T), Sprint, and T-Mobile (TMUS). Among these carriers, Sprint continued to have the worst postpaid churn in the June quarter. Sprint Platform’s postpaid churn of ~1.56% was much higher than the postpaid churn of Verizon and AT&T during the quarter.

Verizon had the best customer retention among these carriers during 2Q15 (Sprint’s fiscal 1Q15). The telecom company had a postpaid churn of ~0.9%. Meanwhile, AT&T’s postpaid churn of ~1.01% was higher than that of Verizon. Moreover, T-Mobile’s postpaid-phone churn was ~1.32% during the quarter.

Instead of taking a direct exposure to Sprint’s stock, you may consider taking a diversified exposure to the telecom company by investing in the iShares Russell 1000 Value ETF (IWD). IWD had ~0.04% of its holdings in Sprint at the end of August 2015.

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