Sprint Gains Subscribers in 3Q16 amid Deep Discounting



Deep discounts may be bearing fruits for Sprint

Sprint’s (S) aggressive marketing techniques that consist of wooing customers with deeply discounted service rates seem to be paying off. The carrier announced on October 18 that it added 347,000 postpaid phone subscribers in 3Q16. The latest quarter marks the fifth consecutive quarter of positive net subscriber additions at Sprint.

In 2Q16, Sprint added 173,000 postpaid phone subscribers, with only T-Mobile (TMUS) beating it with 646,000 postpaid phone additions. Verizon (VZ) added 86,000 postpaid phone subscribers in the quarter, while AT&T (T) lost 180,000 postpaid phone subscribers.

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Sprint relying on deep discounts to gain market share

The chart above shows postpaid subscriber gain or loss by the national carriers in 2Q16. Postpaid phone subscribers are the most valuable customers for phone companies, which is why gains on that front are closely watched by investors. Besides generating higher revenue per account, postpaid customers also tend to stick around for a long time.

Since dropping in ranking of US national carriers, Sprint has stepped up its aggressive marketing efforts to gain market share. For instance, any subscribers who defect to Sprint only needs to pay half the price of the plan they have with their existing provider. On top of that, Sprint is footing the $650 switching bill for defectors to its network.

Sprint reintroduced its unlimited data plan as part of the efforts to attract subscribers from the competitors.

Preliminary results show top-line growth

Sprint reported preliminary net revenue of ~$8.3 billion for its fiscal 2Q16, indicating a growth of 3% year-over-year (or YoY). Wireless revenue rose 5% YoY to ~$7.9 billion.

Although Sprint is gearing up to report a loss of $142 million for fiscal 2Q16, the net loss narrowed significantly from $585 million in the earlier quarter. The bottom line in the latest quarter was supported by a $218 million after-tax non-cash gain linked to spectrum swaps.


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