Sprint is pinning much of its hopes for success on the prepaid unit, made up of the Boost Mobile, Assurance and Virgin Mobile USA brands. But with prepaid mobile competition increasing, and from the likes of deep-pocketed rivals including AT&T Inc. (T) and Verizon Communications Inc. (VZ), Sprint could be in for some tough times.
“We estimate that Sprint will have about 15 percent market share within the U.S. mobile subscriber market in 2010, implying about 44 million mobile subscribers,” Trefis analysts wrote on Monday. However, fewer than 25 percent, or 11 million, of those users, will be on the prepaid side, they added.
If Sprint’s recent earnings are any indication, Trefis may be on to something. On Feb. 10, Sprint said in its fourth-quarter conference call it only added 435,000 new prepaid accounts, much less than the 626,000 industry experts had forecast.
Meanwhile, if Trefis projections materialize, Sprint will work to control price declines by marketing the different brands to specific demographics at different price points, Trefis said.
“This will help Sprint to avoid cutting prepaid prices across all markets,” analysts noted.
And, if Sprint keeps improving its customer service, it “will be in a better position to price its prepaid service competitively.”
Yet, Trefis expects Sprint’s per-prepaid-subscriber fee to reach about $19, which could result in a tremendous drop in Sprint’s stock price, the firm said.
Nonetheless, the mobile business is “the most crucial division” for Sprint, Trefis analysts wrote.
Sprint’s shares were trading down 3.22 percent on Tuesday at about 1:20 p.m. Eastern, reaching $3.15. Sprint’s 52-week low sits at $2.51.
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December 14 2018 @ 18:50:05 UTC