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Sprint Plans Cutbacks As Postpaid Subscriber Losses Continue

Overland Park, Kan. — Sprint lost postpaid subscribers at a faster pace in its fiscal second quarter than in the previous quarter, and the company announced plans for additional cost cuts, targeting annualized cost reductions of $1.5 billion.

The cuts will include a head count reduction of about 2,000 on top of recent reductions. The company also launched a management review “to grow its leadership talent with a combination of internal candidates, new outside talent, and SoftBank resources,” the company said.

In its fiscal second quarter ending Sept. 30, the company posted net subscriber gains of 590,000, but that was due to a 827,000 gain in MVNO subscribers and 35,000 prepaid net adds. Those gains overcame a loss of 272,000 postpaid subscribers, up sequentially from the first quarter’s loss of 181,000 postpaid subs.

For its fiscal first half, the company lost 453,000 postpaid subs but gained a total of 370,000 subs, better than the year-ago loss of 615,000 total subs.

Wireless revenues were up 11 percent to $7.93 billion from the year-ago quarter, but wireless suffered an operating loss of $110 million, down from the year-ago loss of $331 million but contrasting with a first-quarter operating profit of $558 million.

“While we are pleased to see customers respond to our new value proposition, we must continue to take bold actions to reach our goal of returning to growth in postpaid phone customers,” said Marcelo Claure, appointed Sprint president/CEO in mid-August. “By improving our competitive position and driving costs out of the business, we plan to deliver long-term value creation.”

As Sprint entered the quarter, the company said it “faced challenges related to competitive positioning and adverse impacts to the customer experience resulting from its comprehensive network upgrade efforts over the last several quarters.” As a result, Sprint “incurred losses of postpaid phone customers that are pressuring revenue trends. To address these challenges and begin to improve the performance trajectory, the company has initiated its transformation plan with a focus on four key areas,” including a second-quarter repositioning with the launch of new price plans and promotions “designed to deliver the best value in wireless,” the company said.

The other key areas are network improvements, cost optimization, and the management review.