AH Sprint CEO New Marcelo Claure Brightstar

Analysts Say Sprint’s New Pricing Will Not Save The Company

August 20, 2014 - Written By Ray Greer

Sprint’s new CEO Marcelo Claure announced after he took over the company about how he plans on turning things around. The list consisted of price changes, network upgrades, and internal policy upgrades as well. However, the order of that list may have been a wrong move, according to analysts. One of the issues with price changes, is it favors new customers over current subscribers.

New customers headed to Sprint could get up to $350 in credit for switching to Sprint, as well as great deals on data plans. However, Sprint hasn’t said anything yet about current subscribers and how they can switch to the new, cheaper plans. In fact, current subscribers seem to be stuck on the more expensive plans that they’ve had for some time. “The challenges for Sprint is that existing prices are still too high and they are slow to reprice the base because of the enormous financial impact it would have on a company with margins as low as theirs,” Craig Moffett, analyst at Moffett Nathanson said “I think it is dawning on people just how hard this is going to be.”

The failure to follow through with the acquisition of T-Mobile, has helped cause Sprint’s shares to drop 50 percent just this year. The acquisition was thought by some to help the company strengthen their network, and make it easier to compete in the market with the top ranked Verizon and AT&T. Since that fell through, investors are very concerned about the future of the company. Not to mention the reaction Sprint has been getting from their new pricing options and lack of customer support for those who have stuck by Sprint through all of this. While Sprint may be more concerned about gaining customers, they may want to add keeping customers to their list of things to accomplish in the near future. Another analyst, Mark Stodden of Moody’s Investor Service said, “They will have to match this effort with some type of retention effort,” Continuing to say, “I don’t think this plan itself is going to turn the company around, but the speed at which they have introduced this change following the new CEO is notable and suggests a more aggressive stance.”

One of the ways Sprint has shown some aggressiveness and planning is how they have changed pricing. Instead of dropping the price on the same offerings, they have kept the same prices but offered more for them. This helps the company not lose revenue since data costs wireless providers very little to offer. “They are not taking existing products and pricing lower; they are giving away more data for the same price. When it comes to the economics of mobile data, there is no incremental cost for giving users more data,” Jan Dawson, an analyst at Jackdaw Research said. Still, these new offerings are not keeping customers around. Sprint currently is number one in customer defections in the US wireless market.

During an interview with Reuters Claure  said, “I think we were going the wrong way,” Claure continued to say, “Its not a secret that we are losing more customers than we are gaining, but we believe if we put together good offers that deliver more value to consumers, customers are going to come to Sprint.” While Claure sounds strong, he ends with the same problem that analysts are noticing. Sprint needs to worry less about gaining customers at this point, and focus on keeping the ones they have. One way to do this could be to skip step one on their to-do list and move straight to step two-upgrade the network. One person who has taken notice of this has been John Legere, CEO at T-Mobile.

Taking to Twitter, Legere has sent out tweet after tweet talking about different cities where T-Mobile’s service is better than Sprint. Legere also sent out a trial ad using Claure’s words against him, saying, “When your network is behind, unfortunately, you have to compete on value and price.”

Let us know what you think of Sprint’s new CEO thus far, and their new pricing. Do you think gaining customers will work long term, or do you think their network should be improved before talking price? Let us know down below or on our G+ page.