Sprint seems to be the talk of the town lately. It really seems that the world is revolving around the #3 carrier in the US right now. First there were the obscene rumors that Sprint bid $20 billion dollars for the iPhone5… There’s the Sprint lawsuit to block the AT&T/T-Mobile merger – so they can buy them instead? There’s also the Verizon wants to purchase Sprint to be competitive with the AT&T-Mobile monster when that buyout happens. The question that remains in our head, can Sprint save itself of is it truly a sinking ship?
Sprint hasn’t turned a profit in years. This doesn’t mean that they don’t have funds available, but investors will only let a company go for so long without seeing some sort of dividend or increase in their investment. Sprint hasn’t had the best track record in this department. According to their Q2 2011 financials, Sprint is carrying almost $5.2 billion in cash/equity that could be used for expansion, iPhone purchases or any other bailout scheme needed to keep the #3 alive for quite some time, even losing a billion a year.
Of course panic begins when the rumors fall about Sprint spending huge money. Their LTE network upgrade will cost them a few billion here and there. The dismantling of Clear, if it comes to that will cost them some additional funding. The retrofitting of their IDEN network to LTE will also be a bit of a financial challenge, but nothing compared to the rumors of the $20 billion iPhone investment began circulating via the Wall Street Journal. We held out reporting on this since the WSJ has been far less than accurate in the past few months on most major announcements, and we feel pretty good today saying that there wasn’t a $20 billion exclusive deal struck, but find it more likely that Sprint will get the 4s first, and the others will have it as they sell through their existing 4 stock.
But will the “exclusive” iPhone4s be enough to save Sprint from itself? We recently looked at our ‘best value in wireless’ stats again and found Sprint is quickly losing ground to other carriers, most notably, T-Mobile in the value section. Perhaps they could take a piece of T-Mobile’s playbook and offer discounted plans to ‘full price’ handset buyers? Maybe get rid of the ‘Premium Data Charge’ for those that purchase a handset at full retail? T-Mobile seems to get that $49.99 price tag stuck in the heads of people, and from all accounts, it is working great. When we ask who has the cheapest plans, T-Mobile is winning hands down. $50 for T-Mobile, $80 for Sprint and AT&T and Verizon don’t want to talk about it.
Sure, Sprint still offers unlimited data, unlimited mobile to mobile on any carrier, and that awesome Google Voice integration, but seriously, can a slightly better deal on minutes and data make up for the service getting worse and worse? We equate our cell service selection to that of a restaurant, if the food is bad, do you keep going back for more, or do you try somewhere different?
The iPhone will definitely help Sprint keep some subscribers that want the iPhone and may actually bring some new ones to them that want a slightly cheaper bill. Sprint’s mantra is changing too fast though, instead of the Now Network, it appears that it should be the Very Soon Network. None of Sprint’s existing data infrastructure will be around another 5 years as WiMAX goes away and LTE comes on board. Sprint has the same attitude with the iPhone4s and it will stop the bleeding, but as a loss leader, it won’t save the thousands of customers that find a better deal elsewhere.
The iPhone could save Sprint, but ultimately, it’s not the phone that needs to be great, it the coverage and the service. Sprint has really made strides to make the experience better, but with the perks dropping and an increase in total customers, they might lose that ground faster than they gained it originally. If they can’t stop people from being frustrated with losing their benefits and cheaper pricing, no phone will save them. They will end up part of Verizon, or worse.