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Category: Sprint
November 9th, 2009
Sprint to cut 2,000 to 2,500 jobs
Sprint Nextel said it will cut 2,000 to 2,500 positions in the fourth quarter in an effort to save $350 million.
The cuts will be completed by Dec. 31.
According to a statement, Sprint will cut jobs across the company, including its wholesale unit and contractors. The company said the cuts won’t impact customer service, something the Sprint has been trying to improve. Nevertheless, Sprint said call volume has decreased so it has discontinued 27 call centers.
Sprint will take a fourth quarter charge of $60 million to $80 million. The layoff news comes as Sprint will reportedly sink another $1 billion into Clearwire.
November 9th, 2009
Money pit? Clearwire to get cash infusion
Sprint Nextel and other Clearwire investors are reportedly going to pump another $1.5 billion into the WiMax provider.
According to the Wall Street Journal (Techmeme):
Sprint would invest $1 billion and its Clearwire joint venture partners, a group which includes Comcast Corp., Intel Corp, Time Warner Cable Inc. and Bright House Networks LLC, would kick in another $500 million, said these people. Google Inc., which has been a key joint venture partner, isn’t involved in the latest financing round, these people added.
The announcement is supposed to come this week.
The latest round of funding is necessary if Clearwire’s partners want to keep WiMax alive. WiMax has big backers, but the horse that’s going to carry the technology across the finish line—Clearwire—isn’t exactly a thoroughbred. Meanwhile, Verizon and other big carriers are betting on LTE, a rival technology to WiMax.
At least Clearwire can continue its rollout into major metropolitan areas. Clearwire was betting on a big fourth quarter, but that was a date with disaster from the start.
October 29th, 2009
Sprint loses money, more subscribers in third quarter
Sprint Nextel continues to lose money and subscribers.
The company said Thursday that it reported a third quarter net loss of $478 million, or 17 cents a share. That tally was 3 cents worse than Wall Street expectations. Revenue was $8 billion, down 9 percent from a year ago.
In addition, Sprint lost 135,000 retail subscribers (statement). However, Sprint said that its year-over-year post paid gross additions were a sign the company was headed in the right direction. Sprint has been saying that for a few quarters, but it’s unclear how long the Wall Street patience will last.
The big question: Is this blip something for Sprint to really get excited about?
As for the outlook, Sprint said it expects that subscriber losses should improve in 2009 from 2008. The company also expects sequential subscriber improvement.
By the numbers:
- Post-paid wireless churn in the third quarter was 2.17 percent compared to 2.15 percent a year ago and 2.05 percent in the second quarter. The uptick was due to “seasonality and heightened competition.”
- Prepaid churn—Sprint owns Boost Mobile—was 6.65 percent, down from 8.16 percent a year ago and 6.38 percent in the second quarter.
- Wireless service revenue in the third quarter was $6.3 billion, down 8 percent from a year ago.
- Sprint generated free cash flow of $664 million.
- The company has $5.9 billion in cash, equivalents and investments.
October 19th, 2009
Sprint acquires iPCS; Deal ends legal spat
Sprint Nextel said it will acquire iPCS for $831 million in a move that adds almost 1 million wireless customers and shelves litigation between the two companies.
In a statement Tuesday, Sprint said the $831 million price tag ($24 a share) includes the assumption of $405 million in debt. Sprint added that it expects to save $30 million a year from the deal and boost cash flow in 2010.
IPCS is a midwestern wireless carrier that sells Sprint service.
The deal, expected to close in the fourth quarter, will end litigation between the two companies. IPCS had argued that Sprint’s 2005 purchase of Nextel violated an exclusivity pact in the territories where it operates. Sprint was planning to divest its iDEN network as a result of the lawsuit.
October 6th, 2009
Verizon-Google changes mobile landscape; Customers have real options again
I had to take a moment to pause and think about this new Google-Verizon chumminess and their common, yet unspoken, quest to go after the Apple-AT&T relationship with the iPhone that includes today’s partnership news and a new ad campaign.
For those who don’t know, I am a Verizon Wireless customer who is currently using a loaner Blackberry Tour. I am also one of the Apple faithful who would rather be using an iPhone but refuses to pay more than $100 a month for the hit-or-miss AT&T service. (But that’s a rant you can read in a previous post.)
What really clouds the issue for me is that I also like Google’s Android mobile OS. I have been carrying around an HTC MyTouch device running pre-paid T-Mobile service for a couple of months now. The service is OK, at best, but the user experience with the software - and the deep integration of Google’s services such as mail, maps and search - is second only to the iPhone (Blackberry has a long way to go, in my opinion).
Yes, I’m a bit torn now - but here’s the good news. I’m torn because I suddenly feel like I have options. Real options.
As my colleague Larry Dignan pointed out in his own post this morning, there has been a trade-off between cutting-edge devices and reliability as a Verizon Wireless customer. (Sorry, the Blackberry Storm didn’t make the cut as a cutting-edge device for me.) Like him, I also stuck by Verizon Wireless and its reliable service over the flashiest new devices. And, in all honesty, I’ve just been holding my breath, waiting for Verizon and Apple to bust out with an iPhone announcement the second that the AT&T-Apple exclusivity deal ends, rumored to be sometime next year.
September 24th, 2009
Report: Verizon says no to Palm Pre
If a report on TheStreet.com is to believed, things just took a turn for the worst for Palm.
TheStreet, citing “people close to the discussions,” is reporting that Verizon has had a change of heart about carrying the Palm Pre, a smartphone that was scheduled to arrive in January. Currently, the Pre is sold exclusively through Sprint - but the carrier’s struggle to compete with powerhouses AT&T and Verizon hasn’t helped Palm sell enough Pre smartphones to make an impression.
The sources also told TheStreet.com that Verizon may order a small number of Pres but offer little marketing of them. Instead, Verizon is focused on new Blackberry products as well as those built on the new Google Android operating system.
For Palm, the news could be devastating. The company said in its last earnings call that it was focusing all of its efforts on the new WebOS, which so far consists of the Pre and smaller Pixi. Part of its growth strategy included bringing its devices to other carriers.
Shares of Palm plummeted in the final minutes of regular trading, shortly after TheStreet’s report was published. Shares closed at $16.16, down nearly 5 percent.
Also see:
September 21st, 2009
Wireless service boosters: A good idea but we shouldn't have to pay extra
You would think that the news of an AT&T Femtocell product - basically, a network extender that can help boost a weak cell phone signal in homes and buildings - would be a welcome product, especially for the iPhone users who regularly have to deal with dropped calls.
But could there be some backlash over the MicroCell 3G product - which is currently being tested in the Charlotte, N.C. region - because of the pricing? I couldn’t help but nod in agreement as I read blogger Adam Frucci’s rant in Gizmodo, who argues that the device and service for these network extenders should be free. Consider the reasoning in this excerpt from Frucci’s post:
Basically, AT&T didn’t have a strong enough network to handle the iPhone. It still doesn’t. Yet they still charge about $100 per month on average to iPhone customers, who have to deal with dropped calls, delayed voicemails and unreliable 3G speeds. If you are in a particularly bad spot, the 3G MicroCell will let you run your calls and data through your internet connection rather than over their shit network.
Where do they get off charging for this? Femtocells will actually reduce the load on their networks. It shifts the traffic over to the internet provider you’re already paying for (which I’m sure ISPs will just love). How does this earn AT&T $20 per month?
Amen, brother.
September 15th, 2009
T-Mobile and Sprint? Wild-cards abound
T-Mobile is reportedly considering acquiring Sprint in a deal that would create the third largest wireless carrier in the U.S. But there are enough wild-cards to cast doubt on an outright merger.
According to the UK’s Telegraph, Deutsche Telekom, parent of T-Mobile, is looking into a Sprint purchase and has recruited investment bankers to study a deal.
If this sounds familiar it is: T-Mobile has been repeatedly rumored to buy Sprint. But you shouldn’t get too wound up about a deal. Why? Analysts are somewhat skeptical about the timeline for such a T-Mobile-Sprint merger and note there are multiple technology hurdles. None of these hurdles mean a deal couldn’t happen, but there are enough of them to make all parties think twice.
“We still view reports regarding M&A activity surrounding Sprint Nextel with a grain of salt, if for no other reason, than the numerous previous instances of such rumors in recent years,” says Stifel Nicolaus analyst Christopher King.
Simply put, A T-Mobile-Sprint merger isn’t a slam dunk to happen.
Here’s a look at the moving parts:
September 14th, 2009
Sprint lures two from Verizon; new 'unlimited' plan seals deal
If Sprint thinks it can lure customers back by offering an unlimited everything plan for one flat rate, well… it may be on to something. This weekend, I became a Sprint customer again.
Last week, the company announced a new unlimited plan that includes, well, basically everything unlimited - SMS, MMS, 3G data (yup!) and, in a way, even voice. The plan, at $70 for an individual plan or $130 for a two-line family plan, includes unlimited mobile-to-mobile calling to any network - yup, AT&T, Verizon, T-Mobile and others. Landline calls and international calls are the only ones that eat from the monthly allowance of voice minutes. 
A quick history: The Verizon contracts for my wife and teen daughter’s phones are up and they’ve both been hinting that they’d like to do more with their phones - as in mobile web, as in a data plan and a smartphone. I’ve resisted because, under Verizon, the monthly bill takes a pretty steep hike but now we had some options.
My daughter spotted the Sprint flyer in, of all places, the weekly newspaper ads this weekend and started waving it around for me to see. Getting the hint, I first called Verizon to get a run down of my options on plans, promotions and so on. Verizon has good plans - but the deal-breaker is the monthly add-on for data. For a smartphone, it’s $30 extra per line; for mobile web access on a web-capable phone, it’s $20.
The Sprint option was interesting because it included unlimited everything. Te individual plan comes with 700 minutes but the family plan has 1,500 - more than enough, seeing how the pool only gets tapped from landline or international calls. We did some plan comparisons. And many of them were pretty competitive when you added unlimited data to existing voice plans - but that mobile-to-mobile across network lines just kept giving Sprint the edge.
Also see: Palm Pre weekend: Sprint could steal Palm’s moment
In the end, both wife and daughter ended up getting colorful Blackberrys that came with big rebates. Here was the one drawback about the Sprint experience. Neither wife nor daughter were big Blackberry fans. They just didn’t care for the rest of the offerings - not even the new Palm Pre and Palm Pixi.
As for me, I get two monthly bills now, instead of one. But, I also get to drop to a lower-priced plan for the Verizon account because two of the heaviest users of the family are leaving. I crunched some numbers and found that, when all is said and done, I’ll be saving money every month.
Icing on the cake.
Truth be told, the contract for my own account is also expiring and I’m free to move on if I’d like. But, I’m liking the Blackberry Tour I’ve been using (though I have big issues with its battery) and am still hoping that Verizon gets the iPhone and/or an Android device sometime early next year. I’ll hang out for a while and see what develops.
In the meantime, I’m looking forward to watching first-hand how teenagers use smartphones, instead of just reading reports about it.
Previous coverage:
September 10th, 2009
Sprint unveils unlimited mobile calling, data, text, MMS for $70
Sprint on Thursday announced its “Everything Data Plan,” which offers unlimited mobile-to-mobile calling to any network, text messages, 3G data, and MMS for $70.
That’s any network, folks: Sprint, Verizon, AT&T, T-Mobile, etc., without using plan minutes
Sprint users will see much in common with its “Simply Unlimited” plan, the difference being the unlimited mobile-to-mobile voice, up from 450 minutes in that plan.
Customers who already have an “Everything Data” plan will be automatically upgraded.
The plan also comes with Sprint TV, GPS navigation, NFL Mobile Live and NASCAR Sprint Cup Mobile.
TechVi, which broke the story, notes that customers will still use plan minutes if roaming on another network when no Sprint coverage is available. In any Sprint coverage area, however, all mobile-to-mobile calls will be free of charge.
The plan fits nicely with a new Palm Pre or Pixi smartphone.
September 10th, 2009
No Pixi dust for Palm?
Palm’s second webOS phone, the Pixi, looks like a good follow up to the Pre, but analysts aren’t expecting any Pixi dust for the company’s financials.
The Pixi, which is expected to retail for $99 or so after rebates, will arrive for the holidays. Palm will talk the Pixi as a fashion accessory (nevermind it may not be much of a looker). Sprint landed the exclusive.
So what’s the financial picture here? Analysts are mixed on the Pixi (see gallery).
For starters, the Pixi will replace Palm’s Centro. Palm is thinking that the Pixi and a Pre price cut to $150 after rebates will push more webOS-based smartphones in the market.
Piper Jaffray analyst Michael Walkley writes:
September 3rd, 2009
J.D. Powers: Verizon tops in voice quality; AT&T, Sprint get no love
Among wireless carriers in the U.S., Verizon Wireless has the best voice quality in five of the nation’s six regions, with U.S. Cellular - not AT&T or Sprint - taking the honors in the sixth region. In the west, Verizon shared the top ranking with Alltel and T-Mobile. The honors comes courtesy of J.D. Powers and Associates, which conducts a semiannual study of voice call quality across the country.
Overall, J.D. Powers found that the wireless industry has done a good job at upgrading its networks, noting that reported problems with connectivity issues such as dropped calls and static have declined since the last report six months ago. In a statement, Kirk Parsons, senior director of wireless services at J.D. Power and Associates, said:
As carriers continue to upgrade existing network infrastructure and create more robust coverage footprints, wireless customers are recognizing an improvement in performance. As customers continue to increasingly stress wireless networks with growing call volume and data usage for texting, e-mailing and surfing the mobile Web, it is critical for carriers to keep enhancing network performance by maintaining and upgrading to next-generation technologies.
The study measures wireless call quality, based on seven problem areas that impact overall carrier performance: dropped calls; static/interference; failed call connection on the first try; voice distortion; echoes; no immediate voicemail notification; and no immediate text message notification.
Also see: NYT: Customers Angered as iPhones Overload AT&T
Scrutiny of wireless service becomes increasingly important because, in the wireless game, carriers are quick to alter the message to meet their needs. Case in point: AT&T touts the “most bars worldwide” and yet it has been the subject of much ridicule in major cities across the U.S. because its voice and data service on the iPhone is considered to be among the worst. Maybe if I were somewhere else in the world, AT&T would be a good choice - but I’m not much of a global traveler.
After trials with AT&T, Sprint and T-Mobile in the San Francisco/Silicon Valley region - and a small handful of other places around the country - I’ve stuck by Verizon Wireless because, for me, it offers the best coverage. The others were hit or miss around the region, though Sprint and T-Mobile were strong contenders. For me, AT&T isn’t in the race (which also means I don’t own an iPhone.)
For a long time, I’ve been advising friends and family (and even readers of this blog) to shop the service instead of shopping the phone. It can be the coolest and sexiest device in the world - but if the service sucks, what’s the use?
Of course, with the carriers offering 30-day no-obligation trials of their devices and service, I would strongly encourage phone shoppers to take a test run first. At least you know what you’re getting yourself into before you get locked into a two-year contract.
Previous coverage:
August 28th, 2009
Will the FCC's inquiries about wireless market be a waste of time?
The wireless industry is about to find out what it’s like to be under Washington’s microscope. The FCC this week announced efforts to further study competitive landscape of the mobile wireless market and determine whether consumers have the necessary information they need to make informed decisions about mobile phones and mobile phone service.
The notices of inquiry announced by the FCC comes on the heels of replies from Google, AT&T and Apple over government’s inquiry surrounding the controversial Google Voice app for the iPhone. Earlier this month, word spread that Apple had rejected the Google Voice app - though Apple says it’s still “pondering” it. It was believed that the reason for a rejection of the app was because it cut into the voice service revenue stream offered by Apple partner AT&T. That’s not exactly the case, as I keep explaining in blog posts, but it was enough to spark some interest in Washington.
The announcements of the formal notices of inquiry are here, here and here.
Also see: FCC’s more proactive stance: Should we cheer or worry?
Washington has raised some questions earlier this year about exclusivity deals, such as the multi-year exclusive agreement between AT&T and Apple for service on the iPhone. In its notice, the FCC wrote:
Wireless mobility has become central to the economic, civic, and social lives of over 270 million Americans. We are now in the midst of a transition from reliance on mobile voice services to increasing use of and reliance on mobile broadband services, which promise to connect American citizens in new and profound ways. A robustly competitive mobile wireless market will be essential to realizing the full benefits to American consumers and channeling investment into vitally important national infrastructure. The FCC is seeking to ensure that competition in the mobile wireless market continues to bring substantial benefits to American consumers.
My biggest concern with the inquiries out of Washington, though, are that the FCC is reacting a bit too late and will move slowly - with new deals and new technologies coming out before any sort of conclusions are reached, potentially making the government’s issue a moot point.
August 17th, 2009
Goodbye, Pre. It wasn't you. It was me.
A week or so ago, I wrote about a smartphone affair I was having, cheating on my Verizon Blackberry so I could get my hands on a Sprint-powered Palm Pre. I said at the time that I was taking advantage of the 30-day return period to test run the phone and the service without being tied down to the two-year contract.
Turns out I didn’t need 30 days for a test-run. After just a week or so, I knew for sure that the Pre wasn’t the smartphone for me.
Don’t get me wrong. I didn’t hate it and I’ve heard from plenty of people who do like it. I actually do think it’s a nice phone - and the Sprint service was great in the Silicon Valley-San Francisco region. I came across a few pockets with dicey service (including my own neighborhood at times) but it was, for the most part, pretty strong everywhere else - both voice and data. The device has a nice screen and, as a whole, it fits nicely in-hand. My daughter loved the mirror above the camera lens when the keyboard was open.
I wasn’t a fan of the keyboard, though. That beveled lip was in my way and the keys were too flat and close together for my liking. Palm’s OS - which is what was really exciting when Palm announced its comeback intentions at CES back in January - was kind of a disappointment, too. The swipe to switch between open apps and windows was nice. But the OS was slow to respond to touch-screen commands, such as opening mail, launching menus and responding to notifications.
Still, my experience didn’t sour my feelings toward Palm or Sprint the way my iPhone experience left me feeling about AT&T. Palm has a nice OS - but it needs some work, as well as a few more devices of different shapes and sizes. Sprint’s pricing and service were both good so I may even reconsider it later for the family.
Also see: Analysts: Sales of Palm Pre have slowed, could drag down company
I’m thinking my next little rendezvous may be with T-Mobile’s MyTouch, the Android phone that Google gave away at its developer’s conference earlier this year. Yeah, I have one - and while I tinkered with it during the initial 30-day test period, I’d like to give it a better test-run. What I really like about this option is the pre-paid service, which keeps me out of a contract and free to try it out for 60 days if I’d prefer.
For what it’s worth, none of this means that I’m ending my relationship with Verizon or Blackberry. If the T-Mobile/Android thing doesn’t work out, I may just hang out without a contract and wait to see what surfaces in 2010. My Verizon Blackberry is still reliable and I have no beefs with it. This is just an end-of-contract mid-life crisis and I just want to know if the grass is greener on the other side of the fence.
So far, it’s not.
August 13th, 2009
Verizon, T-Mobile lead in wireless customer service; AT&T, Sprint below average
J.D. Power and Associates said Thursday that wireless customer service has improved overall as hold times and problem resolution has improved from six months ago. Verizon, T-Mobile and Alltel, which was acquired by Verizon, led the research firm’s customer service rankings.
Overall, customer care performance has improved to 735 on a 1,000 point scale. That’s up 12 points from February. Seventy-six percent of calls to customer service were resolved on first contact, up from 66 percent in February. Hold times also average 5.55 minutes, down from 6.58 minutes in February, according to J.D. Power.
Here’s a look at the rankings:
In general, J.D. Power identified the following customer service trends in wireless:
- A third of contacts are about the cost of service.
- Among customers that contact their carrier two to three times to fix an issue, 17 percent are likely to switch carriers. If a problem is solved in one contact, 10 percent are likely to switch.
- Fifteen percent of contacts are due to calls or text messages from carriers.
August 11th, 2009
My smartphone affair: Cheating on Verizon and Blackberry for a taste of Sprint and Pre
I’m going through a bit of a smartphone mid-life crisis - so I’ve quietly started a smartphone affair with Sprint and the Palm Pre.
You see, I’ve been using a Blackberry on Verizon Wireless for some time now and, in all honesty, I’m a bit burned out. Don’t get me wrong. The Blackberry is still an effective device at bringing together my work and personal e-mail, calendar, contacts and some useful apps, too. And I’ve had no problems with the Verizon service in my home, around the neighborhood and in my travels.
But, lately, I’ve been wondering if the grass is greener on the other side of the smartphone fence. I already know I love the iPhone but am not willing to become an AT&T customer. Windows Mobile just reminds me of Windows - and regular readers know that I’m no fan of Windows - so I don’t even bother looking at any of those devices.
A couple of months back, I spent 30 days playing with the free Android phone that was given to attendees at Google’s developer’s conference, along with 30 days of T-Mobile service. I liked the phone and the Android user interface and even was OK with T-Mobile’s service. But the pricing for T-Mobile seemed kind of high - plus I was still locked into my Verizon account.
But now, with less than 60 days left on my Verizon account, I’ve started lurking around mall kiosks and other places where more seductive smartphones can entice me into picking them up and taking them home. Over the weekend, I ducked into a Sprint store to look around. Next thing you know, I was walking out with a Pre.
Over the next 28 days or so, I’ll put the device - and the Sprint service - through some usage tests (and seeing how I use Google Voice, I don’t have to worry about the phone number issue.) and decide whether or not to keep it. At the end of the 30 days, I’ll post again with my decision of whether to keep it or return it.
You see, folks, I’m practicing what I’ve been preaching for some time now. I am taking advantage of the 30-day, no obligation return policy that the carriers have in place. If I decide in that time that I don’t like the device or the service, I simply return it for a full refund (even though I’m still on the hook for one month’s worth of service.) At the same time, I’m resisting the lure of a flashy phone by putting equal weight behind the quality of service by the carrier. That was my issue with the iPhone when I gave it a 30-day test run earlier this year - iPhone was great; AT&T sucked.
When the Pre came out last month, I ducked into a Sprint store to take a look. Of course, they were sold out - but I did learn a lot about pricing and found that I could probably save $120 or more on my monthly family plan bill by switching to Sprint.
Saving money is great but I’m more turned on by consistently reliable service. Truth be told: the iPhone, Pre and Android devices may be pretty to look at but if the service sucks, there’s no use switching.
Wouldn’t you agree?
July 29th, 2009
Palm's Pre can't offset Sprint's subscriber losses
Sprint called the launch of the Palm Pre a success, but it wasn’t enough to offset a net subscriber loss of 257,000 in the second quarter.
The subscriber loss, which came amid a churn rate of 2.05 percent, illustrates Sprint’s challenge. The company is launching new handsets—Palm Pre, Samsung Instinct s30, HTC Snap and the BlackBerry Tour—but is still having trouble retaining customers.
Meanwhile, Sprint reported a wider-than-expected second quarter loss, a fact that may be worrisome given the carrier’s big bet on the prepaid market, which includes a bunch of subprime customers. On Tuesday, Sprint bought Virgin Mobile for even more prepaid exposure.
Sprint reported a net loss of $384 million, or 13 cents a share, on revenue of $8.1 billion, down 10 percent from a year ago. According to Thomson Reuters, Wall Street was looking for a loss of 2 cents a share.
Sprint CEO Dan Hesse summed up Sprint’s conundrum:
“The widespread visibility surrounding our record-breaking June launch of the Palm Pre handset gave us an unprecedented opportunity to showcase these improvements to customers as a new Sprint…However, we are not satisfied that we lost a quarter of a million customers in the quarter.”
The company said that its poor financial results were due to lower contributions from the post-paid wireless business. That fact raises a question about what Sprint wants to be when it grows up. By focusing on the prepaid business Sprint risks blowing apart its profit margins.
By the numbers:
- Sprint had 48.8 million customers at the end of the second quarter, down from 49.1 million in the first quarter. Of those customers, 34.3 million are post-paid.
- Credit quality of the post paid customer base improved to 85 percent prime. Of course that means 15 percent of the base is subprime credit quality customers.
- Churn in the quarter was 2.05 percent, down from 2.25 percent in the first quarter. In the second quarter a year ago, Sprint’s churn rate was 1.98 percent.
- Boost churn was 6.38 percent in the second quarter, down from 6.86 percent in the first quarter.
- Wholesale and other revenue was down 44 percent from a year ago. That decline is attributed “to subscriber losses from one of our large carrier customers.” There wasn’t a lot of color on Kindle DX and Kindle 2 wholesale subscriptions.
Now there are positives. Sprint lowered its debt, generated good cash flow and can fulfill its debt obligations. However, Sprint only expects that full year subscriber losses should improve in 2009. That’s not growth. Are slowing losses good enough?
July 28th, 2009
Sprint increases bet on prepaid; Buys Virgin Mobile USA
Sprint Nextel on Tuesday said it acquired Virgin Mobile USA in a stock swap worth about $483 million. The move is designed to cement its growing position in prepaid calling plan market. Sprint already owns 13.1 percent of Virgin Mobile.
In a statement, Sprint said it plans to put Virgin Mobile and Sprint’s Boost Mobile under one umbrella. Sprint has embraced the prepaid calling market in the downturn. Sprint said the two prepaid brands are complementary and focus on different customer demographics.
Virgin Mobile USA had roughly 5.25 million subscribers through the first quarter with average revenue per user of $20. The operator lost 133,000 net subscribers in the first quarter.
Stifel Nicolaus analyst Christopher King said in a research note:
We view the acquisition as part of a strategy by Sprint Nextel to continue to diversify itself away from the post-pay business, in which it continues to struggle mightily against Verizon Wireless and AT&T Mobility.
Virgin Mobile USA has been a wholesale customer of Sprint Nextel for years, and recently acquired Helio, another pre-paid operator, last year. The transaction more than doubles Sprint’s pre-paid subscriber base, with Sprint ending 1Q09 with 4.3 million direct pre-paid subscribers, but also more than halves Sprint’s wholesale subscriber total, with Sprint reporting 9.4 million wholesale subs as of 1Q09.
King, along with other analysts, noted that Virgin Mobile had been struggling in the prepaid market. What’s unclear is whether Sprint sees itself as primarily competing with AT&T and Verizon or prepaid players like Leap Wireless and Metro PCS in the future.
Virgin Mobile USA CEO Dan Schulman will lead Sprint’s prepaid business when the deal closes. He’ll report to Sprint chief Dan Hesse. Matt Carter, who runs Boost Mobile, will report to Schulman.
Hesse noted that the Virgin Mobile USA purchase positions it better in the prepaid wireless market, which is growing quickly. In recent quarters, Sprint has talked up its Boost Mobile service, which has seen lower churn rates. Sprint reckons that the Virgin Mobile purchase will be cash flow positive before administrative, operational and distribution synergies. Sprint will license the Virgin Mobile USA brand from the Virgin Group for $12.7 million through 2021.
The deal has a few moving parts. Each shareholder of Virgin Mobile USA gets Sprint shares valued at $5.50. Virgin Group, which owns 28.3 percent of Virgin Mobile USA will get $5.12 a common share and $8.50 for preferred shares. SK Telecom, which owns 15.3 percent of Virgin Mobile USA, gets $4.94 per common share and a preferred share rate of $8.50.
And to handle all of that wheeling and dealing Sprint said it will issue between 81.4 million and 104.7 million shares.
July 19th, 2009
Could Apple really dictate iPhone terms to Verizon Wireless?
The bricks just keep being thrown through AT&T’s reputation window.
This time, TechCrunch’s MG Siegler has an entertaining rant on how Apple needs to dump AT&T and put the iPhone on Verizon Wireless. As noted before, the iPhone may be the worst thing that has ever happened to AT&T’s reputation over the long run.
But Siegler reckons that Apple can dictate terms to Verizon Wireless and simply appear. Siegler writes:
Apple no longer needs AT&T. Thanks to its huge success, it can dictate its own terms to other carriers now, and ensure it controls the iPhone ecosystem — its top priority. Verizon, as the nation’s largest carrier, is likely to give it the most resistance. But that resistance is futile. The iPhone will eventually be on Verizon, on Apple’s terms. It’s just a question of when.
The first part of that riff is true. Apple doesn’t need AT&T. The second part of that—Apple dictating terms to anyone—may not apply.
Why? Beyond AT&T Apple doesn’t have that many options. What’s Apple gonna do? Go to T-Mobile? Good luck with that one. Sprint? Possibly, but its network and customer service—both improving by the way—have been lambasted over the years. That leaves Verizon Wireless. Here’s why Verizon Wireless may not be so enamored with Apple:
- Verizon Wireless hasn’t been crippled even though it would happily take the iPhone. The iPhone only has meant that AT&T can sorta, kinda almost tie Verizon. AT&T ended the first quarter with 78.2 million subscribers. Verizon Wireless had 86.6 million, inflated by 13.2 million from the Alltel purchase. AT&T’s retail churn rate has improved to 1.2 percent, still behind Verizon’s 1.14 percent. The mass exodus from Verizon to AT&T just isn’t happening.
- The Apple-AT&T partnership is great marketing—for Verizon. Verizon is smiling every time one of these AT&T sucks tales emerges. Verizon Wireless can mock AT&T as long as the iPhone fans jeer.
- Verizon Wireless already has a bevy of devices that seem to be working. Granted, these devices aren’t the iPhone, but a look at the financials and churn rate indicate that Verizon Wireless can do fine without Apple.
- Perhaps the iPhone is just a network killer. RIM’s co-CEO Jim Balsillie revealed the company’s secret sauce a few quarters back: BlackBerries are easier on wireless networks. Is Verizon Wireless really in a rush to see if the iPhone will kill its network too? Probably not when you can just mock AT&T all day.
Does Verizon Wireless really need Apple? The case isn’t that clear. If Apple really wants great carrier terms it may want to try Sprint.
July 9th, 2009
Sprint outsources network maintenance and operations to Ericsson
Sprint on Thursday said it would outsource its network to Ericsson in a seven-year deal valued at $4.5 billion to $5 billion.
The deal (statement, Techmeme)Â allows Sprint to offload the costs associated with running its network. Sprint will transfer 6,000 employees to Ericsson. Ericsson will now handle all the day-to-day operations, maintenance, climbing cell towers and other items. The transfer of the network and the employees that go with them will happen in by the end of the third quarter.
Steve Elfman, Sprint’s president of network operations and wholesale, said on a conference call that Sprint still owns its network and is responsible for strategic plans and investments. Elfman added that the goal was to improve the quality of the network and deploy next-generation technologies. Sprint will keep its customer service operations.
Sprint didn’t disclose exact numbers on savings. Elfman said Sprint expects to cut cost per labor unit. Sprint will also avoid investment in the tools that Ericsson already has. Economies of scale will enable Sprint-Ericsson to cut costs on software licenses and other expenses. Those savings will be invested in expanding network coverage.
Among other key parts of the deal:
- Sprint chooses technology platforms and vendors;
- Ericsson maintains Sprint’s wireless and wireline networks;
- Ericsson will optimize Sprint’s inventory of network assets;
- Ericsson and Sprint will focus on improving processes;
- No layoffs are anticipated due to the deal and Ericsson will set up shop in Overland, Kansas, Sprint’s headquarters.
In many respects, the Sprint deal is a straightforward outsourcing pact. However, such deals are rare in the wireless world.
Clarification: My U.S.-centric lens got the best of me. These wireless pacts are common abroad. Camille Mendler, an analyst at the Yankee Group, said:
Outside the United States, deals like Sprint and Ericsson’s are commonplace. Since 2002, wireless operators worldwide have spent $29 billion on network-related outsourcing and managed services deals. It just hasn’t happened in the rather backward US market until now.
Larry Dignan is Editor in Chief of ZDNet and Editorial Director of ZDNet sister site TechRepublic. See his full profile and disclosure of his industry affiliations.
For daily updates, follow Larry on Twitter.
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