Sprint Nextel Corp. (NYSE: S) could be hurting itself by making prepaid wireless so affordable, but for now, the wireless carrier is cleaning up. In fact, Sprint Nextel's only shining light is the acquisition of wireless customers with its Boost Mobile prepaid brand. But, could Sprint's prepaid service threaten the larger wireless companies like AT&T, Inc. (NYSE: T)?Anyone who believes this has a decent point, but a single quarter of excellent growth doesn't make a wireless company. Boost Mobile's $50/month unlimited everything plan racked up 764,000 customers in the first quarter of 2009, but for the most part, Boost's product offerings can't match the wealth of advanced smartphones that consumers are increasingly buying -- and in general, they're only offered with contract plans as those units would be too expensive to offer with prepaid plans.
Still, adding over three-quarters of a million subscribers in a single quarter is gaining on the quarterly subscriber gains from the two largest wireless companies -- AT&T and Verizon Wireless. Will Sprint hold on to the Nextel nationwide infrastructure just for running its prepaid brand in the future? While the aging Nextel network has been rumored to be possibly sold, Sprint may just continue operating two disparate networks -- one for contract wireless and one for prepaid wireless.
Who would have thought that in 2007 when the Sprint-Nextel merger was deemed a complete disaster? Sprint's network lost 1.3 million subscribers in the Q1 period, while its Boost Mobile added 764,000 -- what do those numbers tell us? That there's plenty of life in Nextel's network, that's what.
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