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What Analysts Forecast for Sprint’s Postpaid Phone Churn Rate

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Sprint’s postpaid phone churn rate

In the earlier part of this series, we learned about expectations for Sprint’s (S) prepaid customer net additions in the third quarter of fiscal 2018, which ended in December. Now let’s talk about the telecom company’s customer retention metric, the churn rate. Wall Street analysts expect Sprint to report a postpaid phone churn rate of 1.88% in the third quarter of fiscal 2018 as compared to 1.71% in the third quarter of fiscal 2017 mainly due to intense competition in the telecommunications sector.

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In the second quarter of fiscal 2018, Sprint reported a postpaid phone churn rate of 1.73% as compared to 1.59% in the second quarter of fiscal 2017. The YoY increase was mainly due to subscribers rolling off promotional offers. A rising churn rate is unfavorable for telecom companies because they have to deal with additional acquisition costs, which in turn has a negative impact on their operating margins. Thus, an increase in a company’s churn rate could be a cause of concern for investors.

Peer comparison

By comparison, AT&T (T) is expected to report a postpaid phone churn rate of 0.97% in the quarter, which ended on December 31, while Verizon (VZ) is expected to report a postpaid phone churn rate of 0.82%. T-Mobile (TMUS) is expected to report a postpaid phone churn rate of 0.99% in the same quarter.

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