New York – Sprint Corp
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The announcement came just a day after SoftBank Corp <9984.T> closed its $21.6 billion purchase of 78 percent of Sprint and two days after Sprint closed its buyout of Clearwire Corp, which has a vast amount of wireless airwaves licenses.
Sprint already offers unlimited data services for a flat monthly fee, but because of network capacity concerns analysts have long questioned whether it would eventually be forced to follow its rivals who charge consumers depending on the amount of data they use.
Sprint Chief Executive Dan Hesse told Reuters the new guarantee would reassure customers worried about leaving AT&T or Verizon Wireless for Sprint only to have the offer of unlimited services pulled at some point.
“Our research has shown that is a big issue for us in attracting AT&T and Verizon customers,” he said, adding that the guarantee “clearly differentiates” Sprint from its rivals.
Hesse, who has been battling customer losses at Sprint since he took on the top job in December 2007, said he had to complete the Clearwire deal so Sprint could have “the capacity to be able to offer an unlimited guarantee for life.”
Without Clearwire’s airwaves, Hesse said Sprint “would have run out of gas” on capacity in a few years.
Sprint, which is years behind its big competitors in upgrading to high-speed data services, is working on a multi-billion dollar network to close the gap. It will use cash from SoftBank and Clearwire airwaves to support the effort.
But while Sprint’s ability to offer unlimited services at a flat fee gives it a marketing advantage, BTIG analyst Walt Piecyk thinks its success in luring customers away from rivals will depend mostly on how quickly it can beef up its network.
“They need to change the perception of their network,” Piecyk said.
SoftBank has said its top priority at Sprint will be to improve the network as quickly as possible.
Analysts expect the SoftBank and Clearwire deal to amp up competition in the U.S. wireless market because Japan’s SoftBank, run by billionaire Masayoshi Son, is famous for aggressive pricing in its home market.
Son, who will be the Chairman at Sprint, also won a bitter battle with Dish Network Corp
“The excitement for investors and consumers is that Sprint now has the spectrum assets, the money to build its network and a leader that has the courage to do it,” Piecyk said. “Whether they can execute on that remains to be seen.”
Along with AT&T and Verizon Wireless, a venture of Verizon Communications
On the day that Sprint closed its SoftBank deal, T-Mobile CEO John Legere announced his company would allow customers to upgrade their phones every six months, which is four times more often than its competitors.
Hesse declined to comment on any other changes Sprint and SoftBank will put in place now that the deals are closed.
Sprint also made some small pricing tweaks on Thursday to simplify family plans and service plans for individual smartphone users.
Under its latest offerings, smartphone users will pay $240 less per year than the customers of market leader Verizon Wireless and $120 less per year than No. 2 U.S. operator AT&T and T-Mobile US.
The shares of Sprint, which changed its name from Sprint Nextel to Sprint Corp after the deal, will trade on a “when issued” basis until Friday when it will begin trading again under the S ticker symbol.
I guess all this will come to an end for us when the kosher phones hit the market and everyone will be forced to buy one.
Don’t believe them. They slapped on to my acct an extra $10 because I switched from flip phone to smart phone though the plan included unlimited free data. Then when I wanted to switch to a newer smart phone, they told me they’re slapping on an extra $10 to my monthly bill because the phones are so much better and faster, that you use so mch more data. So my “free unlimited data” plan was already slapped with an extra $20 per month for data. Sprint are liars.
Just switched from sprint to Verizon… Cost more, but it actually works…
Sprints offer unlimited data when they have the worse reception available wherever we use it. Always missing calls or dropping calls.
Good luck for who grabs this unlimited offers.
So you’re saying I can pay now for a lifetime of service for something whose price goes down every year? I can pay today’s higher price and so avoid having to pay next year’s lower price? Wow! What a deal!
Very misleading that T-Mobile says you can upgrade every 6 months. They don’t offer any discounts you have to pay full price for a new phone. So sure you can upgrade as long as you can pay $500 for the phone.