Sprint’s new CEO gets aggressive on data pricing

Sprint’s new CEO, Marcelo Claure, kicked off his tenure by announcing new shared data pricing on Monday. The headline is that Sprint will double the data available for $100 compared with competitors’ pricing. The following comment may be attributed to Jan Dawson, Chief Analyst at Jackdaw Research.

In introducing Marcelo Claure as Sprint’s new CEO, Masa Son suggested Sprint would quickly move to get more aggressive on pricing, and Claure has now begun to deliver. The focus is on giving away more data for the same price, rather than lowering prices per se, and with all the capacity available on the Sprint network, Sprint can afford to do so. Most customers will not come anywhere near using 20GB in a month even across four lines, so there’s little risk involved for Sprint. Paying off customers’ early termination fees early will be slightly riskier, and will also have a negative short-term financial impact for Sprint, as it did at T-Mobile when it began paying ETFs for customers. Sprint is also finally embracing the shared data plans both AT&T and Verizon introduced over a year ago, and which Sprint has criticized in its marketing since then. It’s a sign that Sprint is bowing to the inevitable both in embracing shared data plans, which are becoming the industry norm, and in competing on price when its network is not yet up to the challenge. Sprint’s been losing subscribers for the last few quarters, and desperately needs to start turning around the negative trend. Sprint’s former CEO Dan Hesse had resisted the urge to compete aggressively on price, so this is the first sign that Claure will be more aggressive.

The new pricing plans are somewhat complex, with different prices for discounted and non-discounted phones, long-term pricing and promotional pricing, and so the overall impact is a little more complicated than Sprint’s “double the data” headline suggests. However, it’s undoubtedly a better deal for most customers than competitors’ equivalent data plans. These moves from Sprint are also likely to make it significantly harder for T-Mobile to achieve John Legere’s goal of catching up with Sprint in terms of total number of subscribers by the end of the year, which was always going to be a bit of a stretch. I now believe it will be very tough for T-Mobile to achieve that goal. It looks like Sprint has more pricing moves coming later this week focused on individuals, so this is likely not the end of Claure’s initial moves to get Sprint back in the game. But he will also need to focus on ongoing network upgrades, which are critical to getting Sprint’s long-term growth back. As T-Mobile has demonstrated, price discounting and giveaways can provide a useful boost to short-term growth, but longer-term growth will require better underlying network performance too.

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