Why Sprint’s Customer Defections May Continue

Ruchi Gupta - Author

Nov. 23 2018, Updated 7:30 a.m. ET

Subscriber outflow as promotions end

Sprint’s (S) churn rate, a measure of customer defections, was 1.73% in the September quarter. The churn rate increased from 1.59% a year earlier.

Sprint expects the churn rate to stay high for the next several quarters, as it anticipates that some customers who are currently on promotional plans may leave once the discount period ends. However, Sprint doesn’t expect the churn rate to keep rising forever. The company expects its customer retention rate to improve early next year.

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Sprint shed 34,000 postpaid phone customers

To keep up with the competition, Sprint launched several promotions to encourage customers to give its network a try. Sprint says it uses promotions to grow its customer base because it cannot match the huge amounts its larger rivals spend on advertising.

Sprint lost 34,000 postpaid phone customers in the September quarter, while T-Mobile (TMUS), Verizon (VZ), and AT&T (T) added 774,000, 510,000, and 69,000 postpaid phone customers, respectively. Overall, Sprint added 109,000 postpaid subscribers in the September quarter, compared with 168,000 a year earlier.

Hopes for a merger with T-Mobile

As it struggles to grow its customer base, Sprint is pegging hopes on its proposed merger with T-Mobile to turn around its fortunes. However, the merger proposal has been criticized by Dish Network (DISH) and Altice USA (ATUS) as anti-competitive.


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