AH Sprint CEO New Marcelo Claure Brightstar

Will wholesale business be enough to save Sprint?

November 4, 2014 - Written By Melissa Bailey

It’s been a harrowing and rocky second quarter for Sprint, with a new CEO Marcelo Claure enduring his first quarter with the business.  Growth was largely driven by Sprint’s wholesale business this quarter, however, there were signs of progress.  Sprint posted a fiscal loss of $765 million, or 19 cents a share in the second quarter.  Analysts had projected a loss of 6 cents a share and revenue of $8.6 billion, while the company only reached $8.5 billion.

There seems to still be a lot of work to be done with the company that has suffered through more than a year of customer losses.  Sprint was able to accomplish a gain due to its wholesale business, in which other businesses sell the Sprint wireless services using their own name.  Unfortunately, larger rivals such as Verizon and AT&T have been able to keep their customer base by providing a broad and speedy network that justifies a premium for the service.

Despite the gain of 261,000 tablet customers, Sprint lost 500,000 phone customers.  Claure believes the higher losses are due to the implementation of higher credit standards that allows subscribers with lower credit scores to be removed from the service.  Spring is believed to be working on improving the quality of the customer base to avoid the turnover from Q3.

T-Mobile has been able to attract even more customers than expected due to network improvements, promotions, marketing and some social media tactics.  Despite being able to offer lower prices and more data than other carriers, Sprint has lost customers due to a slow delivery to upgrade its network.  The benefits, presented in a bid to attract the attention of new customers may have been the reason new customers are choosing Sprint and are said, by Claure, to be part of the start of a “transformational journey”.

Unfortunately for its employees, part of a plan to cut annual costs by $1.5 billion from 2014 levels is to axe 2,000 jobs in order to yield $400 million in annual savings.  With an employee base of 31,000, the employee cuts amount to approximately six percent.

Claure believes that the fourth quarter will be “the most heated competition ever”.  He says if Sprint can fare well after Q4 he’ll “feel more comfortable”.  Let’s keep an eye on Sprint and see whether they sink or swim.