Sprint May Have Unlimited Data Plans, But Not Unlimited Customers

mitcheli writes "Sprint announced a Q2 loss of $1.6B as 2 million subscribers left their service. While Sprint remains one of very few carriers to continue to allow unlimited data on their networks, the failure to reconcile two competing network technologies (iDEN Nextel and CDMA Sprint) combined with the lack of upgrades to their network and degrading service prompted a mass exodus of subscribers from their network. Of course the fact that during the iPhone 5 release, Sprint openly advertised that their iPhone would not be carrier locked, only to turn around and push out an OTA two months later that locked them probably didn't help much either."

Comments

This is the difference between knowledge & mar

[rabtech]

Sprint has been weighed down by the horrible acquisition of Nextel. They were paying for two networks but only one network's worth of customers.

The loss of these subscribers was intentional and predicted well in advance as Sprint finally shutdown the Nextel platform. They already recaptured the more valuable customers onto the Sprint platform and made a strategic decision to let some go because the equipment fees and/or discounts made it unprofitable to keep them.

Part of the financial write downs was paying lease termination fees on backhaul and sites to shut down redundant Nextel locations. They won't ever post a quarter like this again; the Nextel bleeding has finally been stopped and their cost structure will only improve going forward. If you check the Sprint platform, they are still adding subscribers and revenue is up.

They have also closed the Clearwire deal, allowing them to move forward deploying 2.5Ghz spectrum but that won't really bear fruit until next year when handsets start shipping with support for those frequencies. Now that iDEN SMR 850Mhz is shut down, they can deploy the 3x3 LTE channel in that space which should make a huge diffence for indoor coverage. They have been planning this during Network Vision (their modernization effort that is running fiber to every tower along with LTE) to deploy the Nextel spectrum. All the newer handsets already support it, including the iPhone 5. At the newest upgraded towers they don't even have to roll a truck, the equipment is already installed and can even have the downtilt remotely adjusted.

They aren't stupid... Network Vision is running fiber to almost every tower with microwave bounces for the few that can't get it. The backhaul is all minimum 1Gbps, software upgradable, so they can just turn on more backhaul with a keystroke... The old network was all T1s, requiring a 4-6 week wait on the phone company. The new antennas are more sensitive, can be remotely tilted, and support more frequencies. The LTE gear is all software-upgradable to LTE-Advanced.

They had two major problems. LTE equipment wasn't ready prior to their must-build deadlines for the 2.5Ghz spectrum and they were severely hampered in capital spending due to the Nextel boat anchor. They foisted off the 2.5Ghz spectrum on some investors to help offset the cost and protect the spectrum, probably knowing WiMax was a dead end. Boost was a way to help offset the cost of iDEN with prepaid customers they could jettison later.

Now that SoftBank has solved the capital problem, they own the 2.5Ghz spectrum again, and they are rolling out fiber/LTE, they should be able to challenge the dualopoly on equal footing relatively soon. My city is one of the LTE launch markets and the difference between the old and new networks is night and day.

Once you understand these things, you realize that Sprint is a good play, albeit somewhat risky. The market just goes off headlines (often completely bogus ones, see every Apple story ever) and freaks out. Those are excellent buying opportunities if you understand what is really going on with a company.