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.
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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.
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