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Sprint’s CFO Looks to improve Churn Rate, While Cutting Costs

November 11, 2015 - Written By Alexander Maxham

Sprint has been the subject of many cost cutting headlines as of late. Specifically since Marcelo Claure took over as CEO of the company in August of 2014. Claure was looking for ways that the company can stop losing money as well as stop losing so many customers. Before Claure had taken over, it had been quite a while since the company was positive in customer growth in a quarter. And in the third quarter of 2015, Sprint was positive again. Now there are still some cost cutting measures taking place, but the company is determined to reduce the churn rate even more and improve their network.

The company’s CFO, Tarek Robbiati, was speaking at an investor conference this week. And this is his first appearance since becoming the CFO of Sprint about two months ago. He reiterated that Sprint’s churn rate was a record low in the third quarter, coming in at 1.54, that’s down from 2.18 in the third quarter a year ago. And down from 1.56 in the quarter before that. For those that may not be familiar with the “churn” rate, what this metric does is it compares the number of users coming into the network vs those that are leaving. So seeing that number getting lower and lower means either they are keeping their customers, or they are adding more than they are losing.

Sprint’s CFO stated, “We can take it further down and we will be working in taking churn further down.” Something that definitely needs to happen if the company wants to reclaim the #3 spot in the US or even attempt to challenge AT&T and Verizon for a higher spot. Additionally, Sprint’s Chairman and SoftBank CEO, Masayoshi Son is planning to cut as much as $2 billion in operating costs in the near future. With one of the bigger cuts being thousands of jobs. Robbiati stated that there are a ton of places where Sprint can cut costs. And that Sprint has a huge opportunity to cut costs on its cost of service by reducing how much they pay to their competitors for roaming costs. Which would mean they need a better network. Many Sprint users are able to roam on Verizon’s network when they are out of Sprint’s coverage area. And that bill gets pretty steep for Sprint. They are also cutting down the cost for backhaul and stated that the majority of Sprint’s backhaul is now fiber.

It’s clear that Sprint is making some headway in terms of getting back to profitability, and maintaining profitability. Sprint’s CFO also noted that Sprint hadn’t continuously made a profit in nearly a decade. He aims to change that. Lots of changes being made at Sprint, and it appears that they are all being made for the better.