Sprint Posts $643M Loss Amidst Best-Ever Service Revenue, Major Changes
Sprint is also in a strong prepaid position, as the market continues to shift more in that direction. Its Boost network had its best-ever number of gross adds, while Virgin Mobile had its highest net adds since Sprint acquired the company in 2009. Virgin Mobile has lately taken aim at T-Mobile, offering its customers $100 to switch to Virgin. T-Mobile is the process of acquiring MetroPCS, which would help its prepaid position, and it's now also offering the iPhone and other high-end devices without a contract, which could additionally help it attract customers who might normally choose prepaid. Hesse acknowledged that when a competitor gets "a device as iconic as the iPhone," there's always a temporary impact, although that would be a "second quarter phenomenon." In response to a question regarding Sprint's goals moving forward, Hesse said, "We still think the wireless industry is a great industry to be in, but it will evolve. That's why it's important that [we have a diverse portfolio], and that we invested in prepaid. It's why the wholesale business [which can reach customer segments that the Sprint brand can't] is important."Improvements to churn, a reduction in calls to customer service, the addition of more devices per customer to the network and policies that make it easier for customers to upgrade can all contribute to profitability, said Hesse. The team offered few details on the business deals Sprint is currently considering, but repeated that, as Sprint recently announced, it has formed a special committee to evaluate the Dish Network proposal. "Whether it is, or is likely to lead to, a superior offer ... Sprint management will not take its eye off of operational performance," Hesse said. While the Dish offer would enable Sprint to bundle Dish's television and video offerings with wireless phone service, Softbank, in addition to cash, can offer experience in LTE that would be helpful as Sprint rolls out its network. Hesse said that Sprint's discussions with Softbank continue, and that there's much the two companies from learn from each other. While there are some geographic and cultural differences between Japan and the United States, "when you look at smartphone penetration and the attractiveness of devices, there are a lot of similarities. We can also learn from what are the differences—what works in Japan but wouldn't work here, and vice versa, and why." With its first quarter behind it, Hesse called 2013 a "transformative year for Sprint," adding, "We've gotten off to a good start."
He added that while the industry may be nearing device saturation levels, "perhaps the profitability of the industry could go up."