Sprint remains the third largest major carrier in the US due to subscriber gains for two quarters in a row. But the company’s aggressive promotions to attract new customers have put it in the red.
Sprint on Tuesday reported it added a total of 1.2 million new customers during its fourth fiscal quarter, which ended March 31. This compares to a loss of 383,000 customers in the same quarter a year ago. In its third fiscal quarter, Sprint added 967,000 new customers.
Of the new customers added in its fourth quarter, 211,000 were so-called postpaid subscribers, or traditional customers who are billed at the end of each month. Sprint lost 231,000 of these subscribers during the same quarter a year ago. It added only 30,000 of these customers in its third fiscal quarter.
Sprint’s growth largely came from its prepaid businesses. But the company also lost fewer postpaid subscribers than it has in previous quarter. Its churn rate, or the rate at which customers leave its service, was 1.84 percent. This is a significant improvement from the previous quarter’s churn rate of 2.3 percent and marked the best sequential improvement in nearly seven years, the company said.
The new customer additions brought Sprint’s total subscriber base to 57.1 million customers, which was enough to keep its standing as the third largest wireless operator in the US. Rival T-Mobile has been nipping at its heels for several quarters. T-Mobile added a total of 1.8 million customers during the most recent quarter, which brought its total subscriber base to 56.8 million customers.
Maintaining its status as No. 3 comes as Sprint struggles to regain its footing after several quarters of customer losses. The new customer additions are a sign that CEO Marcelo Claure’s strategy is working. Claure, who joined Sprint as CEO last summer, has focused his attention on cutting costs and slashing pricing on services to attract new customers. He also expanded the company’s retail presence with the addition of more than 1,000 RadioShack stores.
Much of Sprint’s woes come from aggressive competition from rivals, such as T-Mobile, and a poorly executed rollout of a new network. The company has been ripping out and replacing its infrastructure to make it more flexible for future upgrades. It’s also been upgrading its network to 4G LTE service. Sprint came late to the 4G LTE market, having bet initially on a competing technology called WiMax to offer faster speeds.
As Sprint made these upgrades, its service suffered, which caused many customers to leave. As part of the turnaround effort, Claure has also focused network upgrades to a small group of cities to ensure these key cities have better coverage.
The company’s positive subscriber growth came at a cost in the quarter. Sprint reported that its revenue fell 6.7 percent to $8.28 billion from $8.88 billion in the same quarter a year ago as it aggressively cut prices to attract new customers. Its losses also widened to $224 million, or 6 cents per share. This compares with a loss of $151 million, or 4 cents per share, in the same quarter last year.