Telecom & Wireless
Will Sprint Lose Hundreds of Millions on Price Plan?
Published:
Sprint Corp. (NYSE: S) has already shown it can lose hundreds of millions of dollars. It did so last quarter when, on revenue of $8.49 billion, it managed to lose $765 million. Management also said increased selling costs probably would put upward pressure on expenses in the future. Now, it has begun to offer an aggressive plan to take customers from AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ). The program is bound to cause deeper losses.
The move is wildly risky:
In an unprecedented move, Sprint today announced it will cut in half the monthly rate plan for Verizon and AT&T customers who switch to Sprint beginning Friday, Dec. 5. With the Cut Your Bill in Half Event, Sprint will provide unlimited talk and text to anywhere in the U.S. while on the Sprint network – regardless of a customer’s current plan – and match the customer’s data allowance for half the cost they are currently paying for their monthly rate plan.
An example of the savings was illustrated by matching an AT&T bill with four lines and a 15GB mobile share plan that costs the customer $160 a month to a Sprint equivalent with a price of $80. If Sprint can make money on these customers, it will be a miracle.
ALSO READ: 10 Brands That Will Disappear in 2015
Sprint may add several million customers with the new plan, but at what cost, not only to the company but to shareholders? The announcement of the program knocked 3% from Sprint’s shares to $4.72. That is barely above its 52-week low of $4.64, and well down from the 52-week high of $11.47.
This big gamble is a sign that new CEO Marcelo Claure has already started to blunder, on the premise that larger is better. When it comes time to pay for the decision, the mistake he has made with the new pricing scheme will have cost Sprint hundreds of millions of dollars, even if he claims now that the decision is brilliant.
Choosing the right (or wrong) time to claim Social Security can dramatically change your retirement. So, before making one of the biggest decisions of your financial life, it’s a smart idea to get an extra set of eyes on your complete financial situation.
A financial advisor can help you decide the right Social Security option for you and your family. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you.
Click here to match with up to 3 financial pros who would be excited to help you optimize your Social Security outcomes.
Have questions about retirement or personal finance? Email us at [email protected]!
By emailing your questions to 24/7 Wall St., you agree to have them published anonymously on a673b.bigscoots-temp.com.
By submitting your story, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.