Sprint Nextel (S) #3 wireless carrier behind AT&T (T) and Verizon was formed by the merger of Sprint and Nextel in 2005 with a stated goal: "Two great traditions of bold innovation have come together in a new company with a clear mission: To be No. 1 in providing a simple, instant, enriching and productive customer experience. Nice tag line but the company is failing at this goal at such a magnitude it makes one wonder if they even realize it is a stated goal. When Sprint bought Nextel they purchased quite possibly the single best wireless carrier at the time. It had an incredibly loyal customer based and it’s "walkie-talkie" feature was at the time the single most significant breakthrough for the average cell user. It allowed people to not use minutes when communicating to each other over the Nextel network. This caused families and businesses in mass to make the switch to Nextel for the cost savings this provided.
Aside from it’s features, what set Nextel apart from every other provider was it’s customer service. It had bar none the best in the industry. When one called customer service at Nextel you left the conversation feeling that they not only valued your business, but were thankful to have it. A call to customer service was actually a satisfying and enjoyable experience. I would actually receive calls from customer service out of the blue thanking me for doing business with them and giving me 100 or 200 free minutes that month to use. The call was not a "make good" due to a problem, it was just a thank you. They would even call me to offer a free upgrade to another phone, just for being a customer. When was the last time a company called you with a freebie that had no strings attached? Their efforts lead to shareholders being handsomely rewarded as the stock climbed from $3 in 2002 to $30 when the merger was announced.
All that changed with the combination of the two companies. A call to customer service today is only slightly less maddening than listening to two children fight. And, quality of connections to other users has dropped off How can a phone company have a lousy connection? A recent JD Power survey put Sprint at the bottom of major providers when it comes to customer service.
Another recent experience in which I attempted to switch from the Nextel to the Sprint network entailed 3 trips to the Sprint store, a phone delivered two days late to the wrong address and 1 hour on the phone trying to actually place the order. The single most infuriating part? Apparently the folks at the Sprint store are not allowed to sell you the phone and switch you to the Sprint network!! Is this one company or not? Now, they can switch me from Verizon or AT&T to either Sprint or Nextel, but not from Nextel to Sprint, okay…. Understand this is two years after the merger.
The effect of this continued fiasco are felt in an consistent decrease in subscriber growth for the combined company. Sprint has tried to explain this by saying "it has been focusing on higher-quality customers, which has resulted in the losses". Am I the only one who just cannot see the logic in this argument? If the customer you are going after is resulting in increasing losses, how can they be of "higher quality?" Remember, prior to the merger Nextel was a very profitable company.
Shares, after hitting a high of nearly $27 in July of 2005, current trade at $21. 2006 EPS fell 7% from 2005 and Q1 2007 EPS fell 150% from 2006 levels (6 cent profit to a 3 cent loss). It has been over 2 years and this is clearly not working.
Rather than focusing on "higher quality" customers and ignoring the rest of us, how about focusing on higher quality (or just competent) customer service? It worked wonderfully for Nextel.
I have no position in Sprint
Todd Sullivan
5/24/2007
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