Sprint Corp. expanded its half-off rate plan promotion to T-Mobile customers on Wednesday, adding a few twists and hoping to get more consumers to try its improved wireless network.
Chief executive Marcelo Claure had hyped the announcement on Twitter in recent days and pitched the plan to reporters in a rare media conference call.
“We believe this is going to be much more successful than the previous cut-your-rate-plan in half” offer, Claure said, adding that the earlier launch sparked one of the best quarters for adding customers at Sprint.
The deal, however, drew some unwelcome response from Wall Street, mixed opinions from analysts and a torrent of pokes from the Twitter account of T-Mobile CEO John Legere.
Marcelo Claure arrived at Overland Park-based Sprint a year ago, taking the Ice Bucket Challenge and killing the company’s talking hamster ads. He’s now pushing the wireless carrier toward a new strategy for success, pumping up the rank and file with high-fives and dropping “stupid rules.”Mark Davis and Monty Davis The Kansas City Star
Sprint shares tumbled on the news and finished the day down 41 cents, or more than 9 percent, at $3.99. The worries were partly over whether the price cut would hurt Sprint revenues and partly over whether it would make a difference in the battle for customers.
“We had expected some level of promotional pricing entering the holiday (shopping) quarter but admit this was more extreme than even we were looking for,” analyst Jennifer Fritzsche of Wells Fargo Securities wrote in a note to clients.
Jefferies analyst Mike McCormack told clients he doubted “this move will have a significant impact on Sprint subscriber trends.”
McCormack also wondered in his note whether customer sign ups so far mean Sprint could afford to make “what we view as a weak response to competitor offerings.”
Kevin Smithen, with Macquarie Securities, said the price promotion signals that Sprint’s network is ready to challenge rivals and that the company sees T-Mobile as vulnerable.
T-Mobile’s Legere knocked Sprint’s offering with a stream of tweets, including one that called it a “rinse and repeat” offer and another that said it applied to none of his customers.
Another Legere tweet drew on a countdown clock Sprint posted on its website in an effort to draw attention to the announcement.
For his part, Claure tweeted back at Legere saying he should “keep calm” after his Twitter “meltdown.”
Claure, in the session with reporters, said the promotional effort would boost Sprint’s customer base and its finances.
The wireless industry traditionally pushes for new subscribers during the holiday shopping season with promotions like Sprint’s. Many wireless subscribers are in the market for new phones and tablets during the holidays and are willing to switch carriers for a deal.
T-Mobile US Inc. kicked off the holiday push last week with its video streaming offer called Binge On. It reduces the quality of video from Netflix, Hulu and many other video services in exchange for not counting the feeds against a customers’ data allowances for the month.
Sprint included T-Mobile customers in its new half-off rate plan offer. It had pitched only AT&T and Verizon customers with its original half-off rate plan offer a year ago.
To make its offer more appealing, Sprint no longer requires switching customers to hand over their old phones. That feature of the original plan offset some of the promotional expense for Sprint, which resold the old devices.
Switching consumers will have to transfer at least one phone number from their existing carrier to qualify. Sprint’s new offer starts Friday and ends Jan. 7.
Consumers also will face fewer decisions about which Sprint offer to accept. Under the old half-off promotion many chose a different Sprint plan as better than the half-off deal.
Claure said the original half-off rate plan offer required store personnel to analyze too many alternative plans, making the process messy and difficult.
“It was confusing when we did cut your rate plan in half,” Claure said during the call with reporters.
Under the new offer, a Verizon customer can switch to Sprint and pay half the published Verizon rate for whichever level of data the customer wants. Similarly, switching T-Mobile and AT&T customers can choose from the levels of service their provider offers and pay half as much at Sprint.
Writer Ina Fried at re/code noted in a post that the fine print - which is lengthy and included in full on her report – enforces some limits. Fritzsche similarly noted the limits in her report to investors.
The half-price Sprint plan won’t include T-Mobile’s Binge On streaming video feature, unlimited music, rollover data provisions, data tethering, and other services the other carriers provide.
Sprint also did not extend the half-off deal to T-Mobile subscribers with its $95 unlimited plan. Sprint’s unlimited plan costs $70 a month.
In making the announcement, Sprint trumpeted recent improvements in its network in markets where new resources and technology have been added. Dubbed LTE Plus and available in 77 markets, the faster service has topped Verizon and AT&T in tests by Nielsen, Sprint said. Sprint also has improved in market rankings by RootMetrics.
Sprint customers need to have one of the newest devices in the market to be able to tap into the technology the faster LTE Plus network uses. But the deal announced Wednesday doesn’t provide any discounts on phones. Sprint offers installment financing and leases on phones.
“We’re basically selling our network,” Claure said.
Other elements of Sprint’s promotion include a 28-day return period, allowing them to return their phone without triggering a restocking fee.
Claure said the trial is needed to help overcome the consumers’ reluctance to consider Sprint’s network.
“There’s a lot of skepticism about our network as you’re well aware,” Claure told reporters. “The only way we’re going to convince customers to come is if we give them a try and we give them a great offer.”
Sprint also is offering a free tablet and one year of wireless service for the tablet for customers to sign a two-year deal.
Finally, Sprint said it will pay up to $650 in fees to help other carriers’ customers switch.
Claure had been drawing attention to the Wednesday announcement on Twitter.