As Verizon iPhone Launches, Sprint Focuses on Devices, Service, Offers
What do you do when not one but two major competitors offer an Apple iPhone? Hold on tight to the customers you have.
That will be Sprint's plan, CEO Dan Hesse said during a Feb. 10 conference call to announce the carrier's fourth-quarter 2010 earnings, on the morning that Verizon Wireless officially began offering its long-awaited CDMA version of the iPhone 4.
"Our customers not only have a strong device lineup, but they get a lot of value with what we provide them," said Hesse. "I'm not saying there won't be an impact from Verizon getting the iPhone, but we are doing what we can to make sure our customers stay with us and continue to have attractive offers out in the market place."
Addressing Verizon's big launch at another point during the call, Hesse, in his calming tone, reminded those on the call, "As we said in our forecast, we expect to be net-ad positive on post-paid this year, and we intend to continue to differentiate ourselves in the market with simplicity and value and through a very, very strong device lineup."
In New York days before, Hesse - following a performance by the master illusionist David Blaine - brought "a little magic" to the everyday, introducing the industry's first dual-screen Android smartphone, the Kyocera Echo. Sprint now offers 18 4G devices, which is more than any other U.S. carrier.
As for those customers Sprint intends to hold on to, they now reach a total the carrier is rightly proud of, having achieved its best-ever fourth quarter and annual postpaid churn results. During the quarter, it added nearly 1.1 million total wireless subscribers.
Its fourth-quarter net operating revenue was approximately $8.3 billion - up 6 percent from a year ago - and it saw an operating loss of $139 million, which was a 74 percent improvement from a year earlier. Its free cash flow for the quarter was $913 million, and $2.5 billion for 2010.
"It had been almost five years since we added over a million customers in a quarter, and the annual improvement in postpaid subscriber results of 2.7 million vs. the previous year is unprecedented in the history of the U.S. wireless industry," Hesse said in a statement.
During the call, he also addressed build-outs to the Sprint network and the possibility of supporting a 4G LTE (long-term evolution) network, in addition to the 4G WiMAX connectivity it currently offers through the ailing Clearwire.
"We haven't said yet what we will do ... but part of the project is the ability to put LTE - should we decide to do so - on our network," said Hesse. "We're still in the process of determining what we want to do, in terms of 4G and deployment. But part of that is definitely looking at WiMAX versus LTE. We do have the capability... and we do have the spectrum to put LTE on our own spectrum, should we decide to do it."
He added that a decision will be reached, and Sprint's investor community alerted, very likely before the middle of the year.
Verizon executives, during their Jan. 25 fourth-quarter earnings call, backpedaled a bit on the decision to pair their iPhone with an unlimited plan, and announced that, like AT&T, they planned to offer tiered pricing.
Sprint's Hesse, during his call, shared that for now Sprint plans to continue offering its unlimited data plan - explaining that there's a cost-efficiency in a flat-rate plan, as there are costs to the carrier associated with more complex pricing - though it might reconsider this in the future.
"Simplicity is very, very important for a lot of reasons," Hesse explained. "Secondly, as you add in more tiers, there's the potential of dilution, where people will move down to lower ARPU levels ... We like the simplicity and value that we currently offer. But given the usage characteristics and the changes that are taking place at a fairly rapid rate ... we may make a change sometime in the future."