Sprint: Can it convince customers to stay?

Sprint: Can it convince customers to stay?

Summary: Sprint had some good news Wednesday: The wireless provider lost 901,000 net customers and only 776,000 post-paid subscribers in the second quarter. Wall Street was expecting more customer defections.

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Sprint had some good news Wednesday: The wireless provider lost 901,000 net customers and only 776,000 post-paid subscribers in the second quarter. Wall Street was expecting more customer defections. For instance, Morgan Stanley was expecting post-paid subscriber losses of 947,000. But let's get real here: Sprint is on the ropes and customer service woes render the company an afterthought.

In fact Sprint said in a statement that it "currently expects to report higher post-paid subscriber losses in the third quarter due to a seasonal uptick in churn when compared with second quarter 2008 results." Translation: Sprint is losing more customers in the next three months.

Here's the environment Sprint finds itself: Folks are swapping landlines for wireless phones so you'd think Sprint would benefit. But customer service isn't so hot (and the horror stories are legendary). Customers are defecting to AT&T and Verizon Wireless judging by those respective companies' subscriber additions. Meanwhile, Sprint has cool phones, but it's tough to recover from a poor customer service reputation. Year to date, Sprint has lost 1.85 million post paid subscribers. At the halfway mark last year Sprint lost 204,000.

And how do you recover from this word of mouth marketing:

I have never been happier to be rid of Sprint! Their customer service treats you like you caused your problem, EVERY TIME!

I wonder how many military personnel still use Sprint after the word got out that Sprint was cancelling accounts of frequent roamers (many of which were military). I was one of those who was warned about roaming on my frequent trips out of town... and made very sure that as many colleagues I knew were aware of Sprint's practices!

Some people will wonder out loud whether the worst is over for Sprint because churn improved to 2 percent (still way worse than AT&T and Verizon), but that's a difficult call.

Sprint's best bet is to fix itself quickly and sell out to a company that wants to be bigger, say T-Mobile. Dana Blankenhorn suggests that Google should buy Sprint to save the day. The problem is the longer Sprint takes to fix itself the more its potential value to an acquirer falls. After all, Sprint had 51.9 million subscribers at the end of the quarter, down from 54 million a year ago. No matter what lifetime value you put on a subscriber Sprint is worth less to a buyer than a year ago.

And the biggest question is this: Would the potential acquirer of Sprint be able to stop customers from defecting? That's a big issue and adds to the risk of any Sprint purchase. New CEO Dan Hesse said the company's retention efforts--at least for high value customers--appear to be working and its Instinct handset is promising. But Sprint is spinning when it touts that its churn rate improved to 2 percent in the second quarter from 2.45 percent in the first when its defection rate is still roughly double what Verizon and AT&T deliver.

Is Sprint dead yet? Nope, but the clock is ticking and the company could become a wireless zombie. After all, Sprint is raising $3 billion in a private placement to keep running and pay down debt.

By the numbers:

  • Sprint lost 12 cents a share on revenue of $9.1 billion in the second quarter. Adjusted EPS, which excludes the kitchen sink, was 6 cents a share--double Wall Street estimates.
  • Sprint had 35.5 million customers on CDMA, 14.6 million on iDEN and 1.7 million users that utilize both networks.
  • Wireless capital investments were $393 million in the second quarter, way lower than $918 million in the first quarter $1.4 billion spent a year ago.

Also see: Sprint's inferno: Churn baby churn

WiMax saved: Sprint, Clearwire form joint venture; Google, Intel among backers

Topics: Wi-Fi, Enterprise Software, Networking, Software, Telcos

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13 comments
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  • Sprint's customer service is execrable*.

    Sprint's customer service was the reason I dumped them years ago. The customer service was so bad that if I faced a choice of Sprint or going without a cell phone, I'd go without. They will never under any circumstance have me as a customer again.

    *From Dictionary.com - utterly detestable; abominable; abhorrent.
    Letophoro
  • RE: Sprint: Can it convince customers to stay?

    The more important question can they get new ones ????

    I like the Sprint Instinct phone, but I do not want them as a service provider due to their poor customer support. My step son is going to be leaving them when his contract is up( a couple of months) for that reason.
    mrlinux
    • first things first

      Sprint has to stop the bleeding then add customers
      Larry Dignan
      • At the rate they are bleeding...

        they need to do both.
        mrlinux
  • RE: Sprint: Can it convince customers to stay?

    I love their international plan as my daughter lives overseas and it is dirt cheap to call her landline. I haven't had any real issues with over 2 years using Sprint.
    fonegirl
  • Sprint can survive, but...

    ...the customer service has to get better. For starters, I would close the call center in the Philippines; my wife and I have had nothing but trouble with the people there (the Indians are actually OK, but the Americans seem to do the best support job). Doesn't do any good to save money on customer service if you alienate your customers in the process.
    John L. Ries
  • RE: Sprint: Can it convince customers to stay?

    All of the wireless companies have less than adequate customer service!
    Verizon, AT&T and US Cellular cost more and provide equivalent service.
    Sprint has an undeserved bad reputation!
    (No, I do not own S)
    rubidad
    • Well my Tmobile Customer service ....

      has been the best of the bunch and I have had them all except Sprint(My step son has sprint and wants to dump them because of their support (lack of) )
      mrlinux
  • I really liked Sprint....

    I really liked Sprint.. the only reason I left was for the iPhone. (I hate AT&T with a passion, but I'm not a moron so I am not about to hack my iPhone and miss out on all the Apple perks and risk some undesireable's crappy hack software.)

    I tried AT&T back around 1999 and thier coverage and service both sucked the big one. Tried all the other big players as well. Finally decided on Sprint because they have the largest network (still do). The difference was they had to lease thier network out to all the rest of the providers.. I was a happy sprint customer when that happened... I saw a noticable drop in quality all over Northern California the moment they started leasing to AT&T and AT&T customers saw reliable service for the first time ever. (I was a little pissed).. But the Sprint customer service was great. They kept me as a happy customer. I was really pissed when Apple decided to go with AT&T for the iPhone. It was the only thing that would ever make me an AT&T customer again, because they really sucked before...

    So far, no big issues... AT&T's network is still not as good as Sprints, but that because my calls are riding second hand on Sprint's network... Oh Well... If I ever get the choice to take my iPhone to a different provider without the stupidity of trading my Apple updates for hack SW... I'll leave AT&T faster than they can blink. Until then... I'm trapped with AT&T.
    i8thecat
  • Bad customer service

    I also agree that Sprint customer service will be their downfall, and I am among those that hope they go under. In my case I tried to return my late wife's cell phone after she passed away. Sprint wanted to charge a $150 early termination fee because it would be turned off before she completed her contract. I was not a Sprint customer, and was not
    even eligible for the plan she had which was for government employees only, and they agreed I would not be able to use her plan.

    Sprint then agreed to drop the early termination fee if I sent them a copy of the death certificate. I sent one by registered mail and it was received and signed for, yet they claimed they did not receive it and continued sending bills.

    Sprint then asked me to fax it to them and provided the fax number. I faxed it to them, they later claimed they did not receive it, and I even faxed a copy of the registered mail receipt to show they received the paperwork :)

    Sprint continued to ask for a faxed copy of the death certificate, I kept sending it, and they continued sending bills since they "did not receive the death certificate". I then configured my computer to crank out faxes, and included my email address so they could let me know if they ever received a single copy. 3,000 pages and two months later, the bills
    only stopped when I asked a local television station if they would like to cover the saga for a consumer help segment then ran.

    I doubt any other provider's service can match the bad service I received from Sprint, and hope they are left with no customers.
    Dilbert4567
  • It's Network and Mobile-to-Mobile

    I am leaving Sprint in six weeks. The reasons are simple: extremely poor coverage at the main locations I use it at (home and work), and virtually everyone of my contacts is on AT&T. There's only one way for them to address this: their network must be at least as good as the other guys (I have people calling me to ask me what carrier I'm on so they can make sure they're not using it - that's how well known my poor coverage has gotten), and they need to provide free Mobile to *any* mobile.
    dunraven
  • RE: Sprint: Can it convince customers to stay?

    "After all, Sprint is raising $3 billion in a private placement to keep running and pay down debt."

    Ahhh, another wannabe analyst....so easy to jump on the bandwagon on companies like S - you're blog was worthless - the oldest news I've yet seen on this. You are correct to say Sprint is in danger of slowly dying if it doesn't fix its problems. You are showing you're analytical ignorance with the $3B comment. Have you read real Wall Street analyst opinion (even as critical as they are of S, they still understand S is not currently in a liquidity crisis)? Did you listen to the earnings report? Do you know how to read a cash flow statement? Rhetorical answers are no, by the way...in case you can't grasp that concept either.
    taxhound
  • RE: Sprint: Can it convince customers to stay?

    And I thought my Experiances with Sprint were the worst. They've really gone all out to keep me as a customer. Received a mailing offering me a free month if I'd sign a new two year contract. Sprint could offer me a top of the line State of the art phone with all the bells and whistles and I still wouldn't sign another contract.
    LoneWolf57