UPDATE: Sprint Expands Boost Mobile $50 Plan To CDMA Users
July 14 2009 - 1:59PM
Dow Jones News
Sprint Nextel Corp. (S) on Tuesday expanded its Boost Mobile $50
monthly plan to include prepaid customers on the CDMA network as
the struggling wireless carrier continues to seek growth in the low
end.
In doing so, it is making the cheap offering available on a
faster and more reliable network. It's also the latest price cut in
an industry that is aggressively targeting customers unwilling to
sign contracts.
"Today's price action positions Sprint more squarely than ever
as a discounter," said Craig Moffett, an analyst at Sanford C.
Bernstein & Co. LLC.
UNLTD By Boost customers, who use the same network as core
Sprint subscribers, will see their bills cut by up to $20 a month.
Roaming charges and regional restrictions, made popular by rivals
Leap Wireless International Inc. (LEAP) and MetroPCS Communications
Inc. (PCS) and offered in 13 states, will also be eliminated.
Previously, Boost offered the $50 plan to customers on the
Nextel network, which uses different technology than the Sprint
side. The cheaper offering was designed to spur growth and fill
extra network capacity on Nextel.
"Our primary focus is to grow Boost Mobile on the Nextel
National Network," said Boost Mobile President Matt Carter while
saying the business also wanted to acknowledge its customers on the
Sprint network.
In comparison, the number of UNLTD By Boost customers isn't
nearly as large as the size of the Nextel base. The last time
Sprint broke out the figures was in the third quarter, in which
Nextel pre-paid customers outnumbered CDMA users three to one. It's
likely that ratio has gone up as the company shed CDMA users and
dramatically increased Nextel customers.
Boost spokesman John Votava acknowledged the move would reduce
average revenue per user for Boost, but it would also result in a
larger dent in the turnover rate.
"It's a retention offer," he said.
Sprint has been aggressive on the low end. It led the charge for
the price point of $50 for unlimited phone, Web and text message
service under Boost.
While the move may spur growth among pre-paid customers, it
isn't without its risks. Sprint is now operating like a discount
carrier but still has the cost structure and coverage map of a
high-end player.
"This positioning may be the only avenue open to Sprint, but it
is nevertheless a positioning that is corrosive to all players,"
Moffett said.
Sprint shares recently were up 2% at $4.39. The stock has more
than doubled in 2009 but remains down over 47% from a year ago.
-By Roger Cheng, Dow Jones Newswires; 212-416-2153;
roger.cheng@dowjones.com
(Kevin Kingsbury contributed to this report.)