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Sprint Looks To Be Faced With Significant Challenges For Q2 and 2015

November 5, 2014 - Written By Melissa Bailey

Sprint’s new CEO Marcelo Claure has faced some hard times since becoming CEO only three short months ago.  However, Claure has decided to revamp the carrier’s business in the hopes that new customers are attracted and existing customers are retained.  More than 2000 jobs are said to be cut as a result of a new cost-cutting program that is intended to cut approximately $1.5 billion in Sprint’s expenses.  Financial analysts, however, think that Sprint will need to work harder than just cutting costs.  Claure has recently been quotes in a company earnings conference call, acknowledging the problem: “I found the business facing some significant challenges [when I arrive], which are laid out in our financial performance, and I am confident whoever that we are taking the right steps to address these challenges and position the business for long-term success.”

Analysts have suggested the need for Sprint to embark with low-cost prices and little advertising like France’s Iliad, abandoning contracting like T-Mobile, or paying off Early Termination Fees and exempting existing customers’ music streaming from data costs.  Claure has stated that Sprint may choose to eliminate phone subsidies and only offer phone leasing and financial plans.  New Street Research analyst Jonathan Chaplin told Bloomberg: “If Claure wants to be the cost leader, he has to change the game.  Tweaking around the edges won’t cut it…Claure hasn’t done anything spectacular yet.”

Sprint intends on covering 100 million POPs with 2.5 GHz TD-LTE service by the end of the year, which is an increase from 92 million POPs currently.  In addition, Sprint now covers 50 percent of its total LTE footprint with 800 MHz LTE and will complete its 800 MHz LTE buildout in 2015.  A 2.5 GHz network is able to deliver peak downlink speeds of 50-60 Mbps, but unfortunately that would only cover a third of the United States population. “If you look at what is going on in our network it is getting substantially better”, said Claure.  Financial analysts say Claure will need to be more aggressive in adapting Sprint’s business model if he intends on profiting financially, but we’ll need to wait and see what tricks he has up his sleeve.