Sprint Nextel Corp. (NYSE: S) recently posted another dismal quarter as the third-largest wireless carrier in the U.S. lost over a million customers while finally writing off the last $1.6 billion from the disastrous Nextel merger of 2005. The company continues to have slick marketing, a first-class nationwide wireless network and improved customer service. None of these mean a thing if it can't retain customers and recruit new ones from the competition.As such, Fitch recently downgraded Sprint Nextel shares to a "BB" rating from a BB+ rating. Its main line of reasoning: Sprint faces increased competition and customer choices in a ravaged economy. Even though the wireless industry is really not in the commodity business, customers sure view it that way. The Apple, Inc. (NASDAQ: AAPL) iPhone being sold by the competition does not help a bit. In fact, that single handset was the biggest reason for subscriber growth with AT&T, Inc. (NYSE: T) in its most recent quarter.
Sprint may have improved quite a few things in the last year, but customer perception may not be at the level that it needs to be. It's the same with the U.S. automakers. Detroit can produce a car every bit as reliable as the global competition, but inconsistency in customer perception and product reliability in the last two decades is a stain on current efforts. With the Fitch downgrade, Sprint's commitment to the iDEN network (the actual "Nextel" wireless network) was called into question. Why doesn't Sprint jettison that network and integrate its customer base? It's 2009 and if this has not happened by now, it probably won't.











Reader Comments (Page 1 of 1)
2-26-2009 @ 1:52PM
PJD120 said...
I am a sprint customer, and when I first joined them I was very upset with their customer service. You would be holding for hours before someone would come online to help you. I have been with them for 2 years now and they have made a dramatic difference in their customer service, and I feel it is excellent. I think one reason Sprint may not be doing so well is because they don't offer all of their services to customer who may want to upgrade their phone. Like with AT&T, which I was a customer with them before, when you upgrade, they let you choose from all of their phones they have. But with Sprint, they only show you certain phones when you upgrade, they don't show you all the phones they have. I'm going to stay with Sprint, I don't feel no of them are better than anyone else. AT&T and Verizon has problems too, I use to be a customer with both of them. Hang in there Sprint.
2-26-2009 @ 2:32PM
gerald said...
Sprint is the worst wireless carrier ever. I got rid of them after over billings,rude customer service,poor signal and so many other reason I can't even list them. Avoid this carrier.
2-26-2009 @ 2:39PM
JWF said...
James Fisher from Sprint here. "Customers flee"? You make our quarterly earnings report sound like a Godzilla movie with people in the streets. I've said this in posts here before, and I'll say it again: yes, we still have challenges, no doubt about that. But, while we lost customers in the fourth quarter, we were the only major carrier to actually improve postpaid churn year-over-year, and we were the only national carrier that showed better net add performance sequentially in the fourth quarter -- in a dismal economic environment. So, as you acknowledge, we have made improvements in our business -- and it's showing in the numbers. As for customer perception, that's among the improvements -- third parties are validating our own internal measurements that customer satisfaction is increasing. And our iDEN network remains key to our strategy -- right now we have extra capacity on that network, and it's opened the door for our prepaid Boost Monthly Unlimited offer that's going gangbusters. That's in addition to the new devices, pricing and services we're offering iDEN/Nextel postpaid customers. And one last thing about 2009 and customer interest -- two words, seven letters: Palm Pre.
2-26-2009 @ 11:54PM
ExNext said...
JWF;
You are ignoring some of the obvious facts that have a dramatic impact on this subject. For instance the reason that you have extra IDEN capacity is due to the mass migration of Nextel users to your competition. This also factors in when you consider your "best ever" performance levels of the IDEN network. A carrier with no customers could theoretically run a perfect network as there would be no congestion, dropped or blocked calls etc.
Your improvement in net ads is a great point. However when one considers the economy over the last 12 months, the 07 performance of Sprint, and the number of subscribers that your competition has, your analysis is misleading. A company with 50 million subscribers need only add 5 million to have a 10% increase in net adds. A company with 80 million must add 8 million to have the same percentage increase. I feel that you (as an organization) are trying to paint a rosier picture than reality dictates.
As this is considerd a blogging stocks website I feel that Sprint owes current (and potential) investors much clearer data that is not spin controlled.
For instance what is Sprint going to do about IPCS? The clock is ticking and there are no other legal delaying tactics for you to take. The judge has ordered a complete divestment of iden in their territory, and I feel that investors have a right to know if that is what you are going to do or if instead you will buy out IPCS. (The only two options that I see from my perspective.)
Also what about the massive lawsuits brought against the company in regard to the commissions of current and former employees? What effect is this having on morale and performance? Will Sprint settle these or drag this through years of court battles as they have done with the IPCS law suit?
Also, what about the IPCS suit regarding the Clearwire transaction? Is WIMAX truly a long term soluton for your company or will IPCS derail that as well? Along that same subject, what effect will LTE (which VZW and ATT have committed to) have in regard to your 4G roll out?
Dan has given no clear answer in regard to network outsourcing. This will have a significant effect on investor decisions as well I believe.
Sprint has not given any guidance for 09 which I find disquieting from an investor perspective.
No update was given in regard to the billion dollar plus ETF law suit which could be devastating for Sprint.
With 8000 layoffs, the suspension of many company benefits such as tuition reimbursement and 401K matching, my sources tell me that morale of the employees is at an all time low.
When you consider all of these factors (and so many more such as your ratings being lowered etc.) how can you inspect investors to believe in the long term viability of this company.
If you really are responding in an official capacity for Sprint, I would think that it is high time that you and your company address these concerns directly with the invesment community.