Sprint Takes on T-Mobile With 'Biggest Wireless Offer' in US History
Sprint said it's taking on T-Mobile and the other major carriers, offering what it bills as “the biggest wireless offer” in U.S. history. Sprint unveiled a rate plan Wednesday, giving new subscribers who switch from AT&T, T-Mobile or Verizon rates that are half those offered by its competitors.
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“A lot of people have discussed Sprint starting price wars, we don’t think that’s the case,” Sprint CEO Marcelo Claure said on a call with reporters. Claure said he didn't expect the lower prices to hurt his company’s financial bottom line. Sprint’s stock price fell 9.3 percent to $3.99 Wednesday. “We want to do something that persuades American consumers to give us a try, to take a closer look at what we have to offer,” Claure said.
The deal is a simplified version of its "cut your bill in half" deal from last year, which didn't offer that discount to T-Mobile subscribers, Sprint officials said. Sprint recently dropped from No. 3 to No. 4 among the major carriers ranked by number of subscribers, its growth outpaced by that of T-Mobile. Claure said rather than looking at individual plans for each subscriber, Sprint will base its offer on a standard plan. “It was confusing when we did ‘cut your rate plan in half,’” he said. “There were thousands and thousands of different rate plans.”
Sprint said, for example, T-Mobile offers 10 GB of data for $80 per month, but the same customer can now get the same amount of data for $40 per month from Sprint for two years with a contract. Claure said the only plan that isn't included in the offer is T-Mobile's offer of unlimited data at $95/month. Sprint also said it will pay the cost of switching up to $650.
Sprint said it will allow customers of other carriers to try the Sprint network for 28 days, with the ability to return devices no questions asked if they’re not satisfied. Sprint also said it will give a limited number of current subscribers a free tablet in a move aimed to further cutting into churn. The deal starts Friday and ends Jan. 6. “We think that gives people time to come and to try our network,” Claure said.
“Did we just witness beginning of the end for @sprint?” T-Mobile CEO John Legere tweeted. It has “$2.5B to cut, laying people off, now price cuts?” Sprint earlier said it planned to cut $2 billion or more of run-rate operating expenses in fiscal 2016 (see 1511030049).
Wells Fargo analyst Jennifer Fritzsche questioned whether Sprint went too far. Sprint “has been adamant about providing the best value in wireless, but not at the expense of profitability,” she said in a note to investors. “We had expected some level of promotional pricing entering the holiday quarter but admit this was more extreme than even we were looking for.”
“This is all we’re going to advertise,” Claure said of the price plan. “We plan to be very vocal. We plan to be everywhere.”
Sprint said Tuesday it's offering enhanced LTE Plus service in 77 major markets. “The Sprint network is hitting its stride,” Chief Technology Officer John Saw said in a blog post. “We’re seeing a significant improvement in performance resulting from our 800 MHz and 2.5 GHz build, our relentless focus on cell site optimization, and our targeted deployment of LTE Advanced features like carrier aggregation and beamforming.”