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Sprint Revamps Prepaid Strategy

Overland Park, Kan. – Sprint Nextel will add a new
prepaid brand and reposition its existing prepaid brands in mid-May when it
announces and implements a new prepaid strategy, executives said in announcing
first-quarter results.

The carrier’s
current prepaid brands are Boost Mobile and Virgin.

The new strategy
will include a “fully revamped Virgin Mobile proposition” and a new brand
targeted to the pay-as-you-go prepaid segment, said prepaid group president Dan
Schulman. In part, Virgin will target “young savvy consumers who want to stay
connected via social media,” he noted.

The strategy,
Schulman explained, will segment the prepaid customer base “more effectively”
to address the needs of specific customer segments and thus reduce reliance on
price to drive growth.

“Our strategy
will be well beyond pricing” and will therefore deliver “the right value to
meet the right needs of the segment,” Schulman said. Previously, he pointed out
that each brand will appeal to people with unique needs and to people who shop
in different channels.

The carrier’s
new prepaid strategy “has been enthusiastically received by retailers [and] by
handset manufacturers,” he said without revealing many details. The multi-brand
strategy will be “fully rolled out” by the end of the second quarter, he added.

CEO Dan Hesse
called prepaid 4G service “a possibility” but didn’t say if 4G would be part of
the May rollout, if at all.

The prepaid
strategy will be the newest strategy in a multi-year effort to turn the
company’s fortunes around.

In the first
quarter ending March, Sprint Nextel continued to lose subscribers and money in
its wireless operations, although at a slower pace than in previous quarters.
In addition, wireless revenue posted its first year-to-year increase in almost
three years, though they grew by less than 1 percent year over year to $6.43

For the quarter,
the carrier’s wireless segment posted a net operating loss of $330 million,
down from a year-ago loss of $558 million and down sequentially from a
fourth-quarter loss of $635 million. The full-year 2009 net operating loss was
$1.96 billion, compared with 2008’s $2.81 billion.

 For the quarter, the carrier’s subscriber base
shrank by 75,000, compared with a year-ago reduction of 182,000. The total
subscriber base at the end of the quarter stood at 48.1 million.

 In 2009, the carrier lost 1.13 million
subscribers, compared with a 2008 loss of 4.58 million subscribers.