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Is Sprint's new half-off deal a desperation move?

Matt Hamblen | Dec. 3, 2014
The offer could be a boost for consumers but a big risk for Sprint, which had shaky revenues in the last quarter.

verizon couple
Sprint is trying to get AT&T and Verizon customers to switch to its network by offering half off the price of monthly data plans. Credit: Verizon

Sprint donned its boxing gloves with an extravagant offer to cut monthly wireless rate plans in half for new customers who switch to Sprint from either Verizon Wireless or AT&T.

The new "Cut Your Bill in Half" offer, which starts Friday, notably doesn't apply to T-Mobile customers. Sprint is clearly positioning itself to take back the "top value in wireless" crown from T-Mobile, which has dominated headlines for for more than a year with its new and unusual pricing and contract plans.

Whether Sprint can afford to attract new customers by cutting costs so drastically, and at the risk of imperiling its already shaky revenues and profits, remains to be seen.

New customers, meanwhile, may not find Sprint's network as reliable as they'd like and could regret switching carriers. Also, new customers would have to surrender their old phones on Verizon or AT&T for zero cash on trade-in and must purchase or lease a new one from Sprint. Those conditions could be enough to make prospective customers balk.

"Sprint's 'cut your wireless bill in half event' smacks of a desperation move," said Jack Gold, an analyst at J. Gold Associates. "Sprint is assuring a very low margin for those new customers they sign at half off ... But this is also a sign that the new management at Sprint will not sit idly by while other carriers steal away their subscribers. They have their boxing gloves on and will use them whenever they have to."

Roger Entner, an analyst at Recon Analytics, said Sprint CEO Marcelo Claure is "under pressure to do something about losing subscribers and I doubt the last value offers they made worked as much as they hoped for."

Sprint's fast 4G LTE network is rolling out in cities across the country, Entner added, "but the question is whether it's getting fast enough for [new customers] to stay."

There have been reports of spotty Sprint network coverage in cities across the country. Entner blamed the problems on the method Sprint used to provision LTE in the last 18 months -- by "ripping old things out and without getting network activation permits fast enough. Holes in wireless coverage have appeared even where there weren't holes before."

Hopefully, Sprint's network will be "much better in six months," Entner added, as upgrades catch up with coverage needs.

How 'Cut Your Bill in Half' works
Sprint's half-off plan allows new customers switching from Verizon or AT&T to get unlimited talk and text in the U.S. while on Sprint's network. Sprint also will match the customer's data allowance with the previous carrier but at half the cost, as indicated on a monthly bill.

 

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