For years, telecom companies have tried to overthrow each other through better promotions and deals. For example, Sprint has been pushing its 50% off promotion for the last three years, but it has decided to end the promotion this week, according to The Wall Street Journal.
Sprint’s 50% off deal became untenable
Crediting Wave7 Research for the information, the WSJ says the U.S. firm may end the promotion within the next few days. The increase of unlimited data plans has compelled the telecom company to stop its “Switch and Save” 50% off deal.
It appears the recent offers of unlimited data plans by Verizon and AT&T has hit the company pretty hard. The report by the WSJ quotes industry analyst Jeffrey Moore, who says that Sprint’s offering became untenable in the new unlimited data offering market.
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Sprint’s 50% discount promotion focused more on the actions of the other major carriers in the United States. It focused on offering a 50% discount off the plans offered by the other carriers. Sprint’s previous strategy was to use the 50% discount offer to get more customers and then upsell those customers to a plan which was the same as the one offered by Verizon or AT&T, but with more data.
However, that does not work when consumers switch from an unlimited plan because the telecom company has nothing to upsell. Also the carriers like AT&T and Verizon are offering unlimited data plans, which were not offered under Sprint’s 50% off promotion plan. Many believe that the 50% off promotion persuaded people to switch to Sprint’s network but was not competitive enough to become a viable option.
Rising competition among telecom firms
Sprint may be stopping this promotion, but it may be ready to provide a new set of plans to compete with rivals. Sprint’s existing unlimited data offer that costs $60 a month for one line of service is $10 less than the plan T-Mobile charges and $20 less than what Verizon offers. Also Sprint’s unlimited data plan is $30 less than AT&T’s $90 per month price tag.
Currently, Sprint is running a promotion that cuts $10 off the original $60 a month price tag, making the plan just $50 per month. Even after offering exciting plans like these, the company is facing tough competition from the likes of AT&T, which recently declared plans to provide HBO free to customers who subscribe to its $90 per month Unlimited Plus data plan.
Sprint subscribers have been leaving for the company’s rivals because of better network quality, despite minute price differences. However, because of the rising competition between telecom companies, profits for all major carriers will take a hit, which is the only good news for Sprint currently. Analysts have revised first-quarter estimates as downwards, notes BGR.
Scrapping the 50% offer may be good for the company, as it suggests that it is shifting focus more toward profitability than adding to its customer base. Sprint has not had a profitable year since 2006, reports Yahoo.