uploads///Telecom Sprint Platforms Postpaid Churn

What Does Sprint’s New Promotion Entail?

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Mar. 30 2016, Published 2:14 p.m. ET

Sprint’s new promotion and wireless proposition

In the last part of the series, we learned that Sprint (S) has initiated a new promotional offer to let customers try its network. According to Marcelo Claure, the telecom company’s chief executive officer, on March 25, 2016, “As I talk with wireless consumers across the country, they tell me over and over that a reliable network is the make-or-break factor in their buying decision.”

He added, “Sprint’s 30-day satisfaction guarantee is giving consumers the opportunity to try us out worry-free and experience everything Sprint has to offer – our award-winning, super-fast LTE Plus Network, the best price for unlimited plans, and so much more.”

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Sprint’s satisfaction guarantee

One factor that may be giving Sprint the required comfort level to initiate a “30-day satisfaction guarantee” is the significant YoY (or year-over-year) improvement in its customer retention.

As we can observe in the above chart, the postpaid churn figure for Sprint’s platform fell significantly from ~2.3% in fiscal 3Q14 to ~1.6% in fiscal 3Q15. Moreover, according to Sprint, this customer attrition metric for fiscal 3Q15 was lower than the carrier had witnessed earlier in 3Q14.

Note that in 4Q15, the postpaid churn figures for Verizon (VZ) and AT&T (T) were ~0.96% and ~1.2%, respectively. For the quarter, T-Mobile’s (TMUS) postpaid phone churn was ~1.5%.

Instead of getting direct exposure to Sprint’s stock, you can consider getting diversified exposure to the telecom company by investing in the iShares U.S. Telecommunications ETF (IYZ).

The ETF had ~3.9% of its holdings in the US wireless telecom player at the end of December 2015. Please note that the top four US wireless carriers made up ~32% of this ETF on the same date.

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