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Why Sprint Is Focusing on Expanding Its Distribution Footprint

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Sprint’s distribution strategy

The biggest challenge that Sprint (S), the fourth-largest wireless carrier in the United States (SPY), currently faces is to build its brand and value proposition, as well as to improve consumer perception. So, Sprint considers the improvement of its marketing and distribution efforts a long-term objective.

During the UBS Global Media and Communications Conference held on December 5, 2017, Tarek Robbiati, Sprint’s chief financial officer, was asked about Sprint’s distribution strategy.

Robbiati stated that the company had added 600–700 stores in the previous two to three quarters. The company is optimizing and expanding its retail distribution to lower the average cost per transaction, increase its brand presence, and improve its customer service.

Robbiati added, “We are attacking distribution across our own footprint, distribution partner’s footprint and digital, and that’s the story for fiscal year 2018 as well.”

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Sprint’s revenue trend

According to Sprint, expansion of its distribution could help attract new subscribers as well as boost the company’s total revenues. In fiscal 2Q17,[1. fiscal 2Q17 ended September 2017] Sprint reported total net operating revenues of ~$7.9 billion, compared to ~$8.2 billion in fiscal 2Q16.

Sprint’s top-line growth could depend largely on its ability to garner market share from peers Verizon (VZ), AT&T (T), and T-Mobile (TMUS).

Let’s take a look at the growth in total revenues of the other major US wireless carriers in 3Q17. AT&T’s total revenues fell ~3.0% YoY (year-over-year) to reach $39.7 billion, whereas T-Mobile’s total revenues rose ~7.7% YoY to reach $10.0 billion. Verizon’s total revenues rose ~2.5% YoY to reach $31.7 billion during the quarter.

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