Sprint sees record low customer loss rate, but drops to 4th place behind T-Mobile

Sprint announced on Tuesday its lowest rate of postpaid customer losses in its history.

Sprint announced on Tuesday its lowest rate of postpaid customer losses in its history, even as the company officially dropped a notch to fourth place, behind T-Mobile, among U.S. wireless carriers.

Sprint recorded 57.688 million customers and connections in its earnings report for the first quarter that ended June 30, just behind T-Mobile's 58.9 million.

Sprint and analysts view the fourth-place ranking as irrelevant. They pointed to recent improvements in Sprint's network connections and speeds, judged by various third parties, as a key factor in lowering the record low postpaid customer churn (loss) rate to just 1.56%.

CEO Marcelo Claure pointed to the low churn rate and net adds of 310,000 postpaid customers for the first time in two years as important signs that Sprint "is on the pathway to growth."

"I agree with Sprint that consumers do not care who is fourth or third. Sprint's network is finally improving, which is about time," said Roger Entner, an analyst at Recon Analytics.

Entner said Sprint is showing a record low churn at the same time that other carriers are showing lowered rates. "It looks like consumers are happier with the choices that they have made."

One factor in lowering the churn rate could be that Sprint and other carriers are tightening requirements on the credit they extend to customers, analysts said, but Sprint didn't confirm that tightening is happening.

Sprint's network improvements and overall financial progress got a ringing endorsement from Masayoshi Son, chairman and CEO of Japan's Softbank Group, which owns 78% of Sprint.

"I am extremely excited about the turnaround of Sprint," Son said on the earnings call. He said he personally has worked nearly every night from 10 p.m. to 2 a.m. in Japan with SoftBank and Sprint engineers to find the best way to implement better coverage using Sprint's network holdings. Sprint has used big data insights to best focus its network elements to achieve maximum speed and network coverage.

"I don't want to sell the company," Son added. "Sprint is going to be a very, very good company for which I'll be very proud."

Son also chided U.S. wireless networks generally, compared to those in Japan, calling all four major networks "very bad" and "not something you should be proud of." He made the comment in reference to a question about how Sprint will react to plans by AT&T and Verizon Wireless, the two top U.S. carrieris,  to expand the ability to use video over wireless.

"How would a customer benefit with a video bundle especially through wireless that will choke the network [so] network congestion will become even worse?" Son added. "Before we talk about a bundle, all four carriers in the States have to cure the issue of congestion that is more fundamental to the basic service of the network itself."

Claure suggested that Sprint's response to the video-bundling provisioning by competitors would be through Sprint partnerships with video providers "rather than buying assets."

Claure and Son described various technologies that will help Sprint reach network parity or superiority over all U.S. wireless carriers within two years. The plan includes using 800 MHz, 2.5 GHz and other frequencies along with a "densification" program with other cellular technologies. Those technologies include macro cell site deployments and use of tens of thousands of small cells, some inside of buildings. Densification refers to filling in network coverage gaps between existing cell towers.

Sprint also said its 1,435 co-branded Sprint-RadioShack stores now have Sprint employees working inside to offer Sprint services and phones. The company has 4,500 physical locations in the U.S.

Son and Claure also revealed that Sprint is working with SoftBank and others to set up two new lease company agreements, one to finance customer device leases and the other to finance network equipment. Son didn't reveal names of the other parties.

Operating income for the quarter was $501 million, down from $519 million in the same quarter of 2014. Revenues were down 9% over a year ago to $8 billion.

Three recent top-level executive appointments at Sprint are intended to help build out the management team with Claure, who was picked for the top job by Son a year ago. They include Kevin Crull as chief marketing officer, Tarek Robbiati as chief financial officer and Gunther Ottendorfer as chief operating officer for technology.

Ottendorfer, formerly chief technology officer for Telekom Austria Group, will report directly to Claure. John Saw, previously Sprint chief network officer, becomes chief technology officer and reports to Ottendorfer. Ottendorfer will lead a new Technology Office with responsibility for all network planning and deployment functions as well as Information Technology.

Entner said the appointment of Ottendorfer is a surprise since Saw was doing a good job. "Why does Saw need another boss?" he asked. "In most companies, the chief network officer/chief technology officer reports to the CEO."

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