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Sprint Fights for Mobile Market Relevance: First Quarter Earnings Positive

Leonard Grace

Sprint's vision along with determined action says everything. They are fighting for mobile market relevance, thumbing their noses at detractors, moving beyond being relegated to a distant 3rd ranked carrier in a fast growing market. It's acquisition of the iPhone and agreement to spend $15.5 Billion over four years for the privilege has investors squawking bankruptcy sooner rather than later. First quarter earnings reveal that Dan Hesse's decision to purchase iPhones back in October 2011 is paying off in solid contracts. It beat both Verizon and AT&T in new mobile connections during the period.

Sprint Beats AT&T and Verizon in New Connections

As both Verizon and AT&T see declines in new connections, Sprint is growing at a good clip activating 263,000 new contract customers during the period, while Verizon added 240,000, and AT&T connected 7,000 in 1st Quarter 2012. We all understand that both the top carriers have had iPhone access for quite some time signaling the saturation of their markets. Sprint, on the other hand has a tremendous upside in sales potential with its controversial decision to gamble access to the most popular Smartphone ever. That decision is going as planned which may surpass all expectations down the road. See (Sprint Loss Widens on Nextel, iPhone lifts sales)

Unlimited Data Plans Offset Slower Speeds

Although Sprint is slower in speeds compared to Verizon and AT&T, it could offset the difference in continuing to offer unlimited data plans. How important is speed compared to plans that automatically drop your speed if set limits are reached? It might not make that much difference if customers know access is unlimited and are comfortable knowing what their speeds will be at all times. Most carriers throttle customers who go over contacted data plans, which have garnered prominent attention from news organizations. Sprint is the only major carrier which has stuck with eedsunlimited data plans in contrary to its larger competitors. See (Sprint: iPhone Decision Paying Off Despite Quarterly Loss)

"Sprint posted easily the most impressive (quarter) in U.S. telecom" Kevin Smithen, an analyst at Macquarie Securities

Shutdown of Nextel / Aggressive Network Upgrades

Sprint's Nextel network, which will be shutdown later this year, hurt earnings substantially for 1st quarter 2012. Since 2005 Sprint has been struggling with running two disparate networks and is moving to eliminate Nextel, which has lost customers regularly, and use the defunct radio frequencies in upgrading to a 4G (4th Generation) wireless broadband network using the standard LTE technology in its markets. This will position the carrier for improved growth and performance in its networks for a long-term outlook.

Sprint Beats Analyst Predictions on Long-Term Strategy

Outperforming analyst predictions Sprint posted revenues at $8.73 Billion compared to the $8.71 Billion investors had hoped for the carrier. This clearly indicates Sprint, headed by Dan Hesse is on the right track to turn the financial corner based on long-term strategy. While the stock is at $2.43 today, measures put in place by the mobile carrier will disconnect it from non-performers referenced by Nextel's demise and Clearwire's network being regulated to pre-paid accounts only. This restructuring will take time but will make for a much better performing company in the long-term. Kudos for Dan Hesse for looking past the obvious and positioning his company in a win-win position going forward. See (Sprint to Boost Mobile)

By Leonard Grace, Founder & Editor - Broadband Convergent

Related topics: Broadband, Mobile, Telecom, Wireless

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