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How the Unlimited Race Has Affected Sprint

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The return to unlimited data offering

Sprint (S) continues to add new customers, and company management described progress in the latest quarter as a milestone. But has Sprint improved its customer retention? In this article, we briefly examine Sprint’s subscriber gains and retention to see the impact of the unlimited data arms race among the top US (SPY) wireless carriers.

Sprint and T-Mobile (TMUS) re-introduced unlimited data plans last year and have forced their larger rivals AT&T (T) and Verizon (VZ) back to the unlimited plans ring, thus escalating competition in the US wireless sector. AT&T and Verizon decided earlier this year to bring back unlimited data plans so as to stem subscriber loss to the smaller rivals.

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Sprint extends subscriber growth streak

Sprint reported 88,000 postpaid phone net additions in its fiscal 1Q17, which marked the eighth straight quarter of net postpaid subscriber gains. The company further reported 35,000 net prepaid additions, reversing the loss of 306,000 prepaid subscribers in the comparable quarter a year earlier. Sprint CEO Marcelo Claure said the gains represent progress in the company’s turnaround journey.

Sprint’s customer retention still wanting

Despite the subscriber gains, Sprint’s customer retention remains a matter of concern. The company registered postpaid phone churn of 1.5% and total postpaid churn of 1.7% in 1Q17. Churn describes customers who have defected or canceled their services. In fiscal 1Q16, Sprint’s churn rate was lower. The company reported total postpaid churn of 1.6%.

However, on a quarter-over-quarter basis, Sprint’s total postpaid churn improved to 1.7% in fiscal 1Q17 from 1.8% in fiscal 4Q16.

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