uploads/2016/05/Telecom-Sprint-Platforms-Postpaid-Churn-1-1.jpg

What Sprint Plans for Its Wireless Customer Retention

By

Updated

Sprint’s customer retention

In the previous part of this series, we learned about Sprint’s (S) cost-cutting plans. Sprint’s postpaid churn has been improving significantly in the last few quarters.

However, among the top four US wireless players, Sprint had the highest postpaid customer attrition in 1Q16. The other companies in this group are Verizon (VZ), AT&T (T), and T-Mobile (TMUS).

During the J.P. Morgan Global Technology, Media, and Telecom Conference, Sprint’s chief financial officer, Tarek A. Robbiati, discussed the telecom company’s intentions regarding customer retention.

Robbiati said, “We see good progress on churn. I do believe our churn is still too high. When we have a handset churn that is better than it has been for years, yes, it’s better than it has been in 2013 and 2014 where it was much higher than now.

“But now, we are at about…above 1.5% churn. I think there is more scope for improvement there and we’d like to take that number down over the upcoming months and years.”

Article continues below advertisement

Sprint’s churn versus its peers

In fiscal 4Q15 (calendar 1Q16), Sprint’s postpaid churn figure was ~1.7%. Verizon continued to have the best retention of postpaid customers among the top four US wireless players. Verizon’s postpaid churn was ~0.96% in 1Q16.

AT&T followed Verizon in this metric with a postpaid churn of ~1.1% in its domestic operations in 1Q16. Meanwhile, T-Mobile’s churn metric was ~1.5% for the quarter.

For diversified exposure to Sprint, you may consider investing in the iShares US Telecommunications ETF (IYZ). The telecom company made up ~3.4% of the ETF at the end of April 2016. The top four US wireless carriers comprised ~29.2% of IYZ’s portfolio at the end of April 2016.

Advertisement

More From Market Realist