Sprint Closes Virgin Mobile Acquisition
Despite widespread improvements in network coverage, customer service and handsets, Sprint Nextel has continued to lose both cash and customers. But instead of turning to the low-churn, high-end customers that have brought success to the likes of AT&T and Verizon Wireless, Sprint has placed its hopes on prepaid.
Today, Sprint closed its $483 million acquisition of Virgin Mobile USA, which was announced in July. What Virgin Mobile offers that a postpaid carrier can’t - at least in Sprint’s view - is growth. “With continued growth in the U.S. prepaid segment, Sprint is further positioning itself as a leader,” said Dan Hesse, Sprint CEO, in a statement. “With Boost’s continued success and the iconic Virgin Mobile brand under one umbrella, Sprint will offer customers value and flexibility with great devices running on a dependable network with great coverage.” In an earlier call with analysts, Hesse called prepaid a “potential growth engine.” “Industry growth [is] more on the prepaid side, which is another reason that we are doubling down on the prepaid market,” he said. “We think there will be more growth there generally than in the postpaid market.”There’s also a lot of competition out there, and Virgin Mobile is battling many of the same problems Sprint has been unable to resolve: customer defections and slumping sales. Like Sprint, Virgin has battled subscriber defections and a high churn rate. The prepaid carrier recently lost about 270,000 customers and its churn rate continues to hover over 5 percent. For its part, Sprint fell almost $480 million into the red and lost 135,000 net retail customers to other carriers in its most recent quarter.The acquisition of Virgin Mobile leaves Sprint juggling three separate brands. It is speculated that Sprint will target younger prepaid consumers with the Virgin Mobile brand while using its Boost prepaid service for more mature subscribers, but there’s been no official word from the company around its postpaid brand differentiation strategies.It will be some time before the effects of the Virgin Mobile acquisition become clear. Over the past year, Sprint has had both successes and missteps. For example, its launch of the Palm Pre rapidly fizzled out to just another smartphone release. On the other hand, Sprint’s $50 all-you-can-eat plan for Boost customers was a major game-changer for the prepaid industry. The savvy Sprint demonstrated with the $50 plan for Boost will need to be extended to Virgin Mobile if the carrier is to survive in the highly competitive prepaid space. Sprint is pinning many hopes for the future on it.
Источник: Wireless Week
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