Sprint Revamps Prepaid Strategy

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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 billion.

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.


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