uploads///Sprint Q Post Pricing

Understanding Sprint’s Aggressive Price Promotions

By

Dec. 14 2016, Updated 11:06 a.m. ET

Sprint’s efforts to acquire customers

Sprint (S) has been trying to recover from years of subscriber losses with promotions such as Unlimited Data or 50% Off. The telecom company is making ongoing progress with respect to subscriber acquisition and retention. Sprint’s 50% Off promotion offers plans identical to each of its competitors at a 50% discount. Although Sprint’s 50% Off promotion has fueled subscriber growth, the company commented that the promotion would not run indefinitely.

Article continues below advertisement

At the same time, the company suggested that it would not double customers’ bills when the promotions begin to roll off at the start of 2017. Instead, the company would prefer to migrate customers to the Unlimited Freedom plan. Unlimited Freedom was launched in August, and roughly half of its new customers have chosen the plan. Sprint noted that the pricing for the first line on Unlimited Freedom is $60, the second one is $40, and the third line is lower than the first two prices.

As you can see in the above chart, Sprint has provided the price comparison of its Unlimited Plan features with several plans by the top three US wireless carriers: Verizon (VZ), AT&T (T), and T-Mobile (TMUS). Verizon does not offer these unlimited plans to new customers. However, AT&T initiated its Unlimited Plan for its DIRECTV and U-verse customers.

Increase in mobile video data traffic

In a saturated US wireless space, mobile video data traffic is a significant growth driver for wireless players. The significant portion of mobile data traffic includes video, which drives wireless carriers’ data consumption.

According to Cisco’s (CSCO) VNI (Visual Networking Index), video constituted ~61% of mobile data traffic in the US at the end of 2015. It is anticipated that by the end of 2020, this figure could rise to ~77% of all mobile data traffic in the United States.

Advertisement

More From Market Realist