Sprint Picks Up The Pace

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What's going on?

Sprints stock jumped more than 20% on Monday, which is a huge move for a company that was already worth about $20 billion. Americas fourth largest wireless carrier reported that, in its most recent quarter, it added more customers than expected and revenue fell less than expected.

What does this mean?

Sprint is using one of the oldest tricks in the book: dropping its price in a bid to gain customers and its working. By offering its service for half the price of its rivals, it was able to gain market share from its main rivals Verizon, AT&T and T-Mobile. On a broader level, Sprint conceived of and began enacting a turnaround plan after Japanese telecom giant SoftBank bought a controlling stake in it in 2013 and it seems like the plan is starting to bear fruit.

Why should I care?

For the stock: The pieces of the puzzle are coming together.

The company has focused on adding postpaid subscribers (e.g. customers on a contract, not prepaid) and, last quarter, added more subscribers in that important segment than it has in the past nine years. Customer churn (e.g. those that left) was the lowest in company history which is partly reflective of the networks improved speed and reliability. Concerns remain over Sprint having a lot of debt – but investors seem to be getting more confident that the companys performance is making that less of a risk.


The bigger picture: Its become cheaper to build wireless networks.

For years, Sprints network was derided as sub-par compared to the likes of Verizon and AT&T. But, in recent years, more competition in the wireless infrastructure industry (e.g. Sprint would pay a company like Ericsson to build its 4G network) has allowed Sprint to improve its network at a much cheaper price than its rivals paid in previous years.

Originally posted as part of the Finimize daily email.

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