Sprint is growing, but it’s still losing core phone customers

Marcelo Claure may have brought the struggling Sprint back to growth, but the new CEO probably wishes the company were growing in different ways. Sprint added 1 million new connections in the fourth quarter, but they were all prepaid, wholesale and tablet connections instead of core smartphone subscriptions.

In its Q4 earnings (the company’s fiscal Q3), Sprint revealed it lost 205,000 postpaid phone subscribers, the high-value customers who tend to be either on contract of premium service plans. While [company]Sprint[/company] total postpaid connections did grow by 30,000 last quarter, it was all tablets. Tablets are great, but a $30 tablet plan brings in half the revenue of a $60 smartphone plan. And as far as the slate race goes, [company]Verizon[/company] and [company]AT&T[/company] are clearly winning, connecting a combined 2.4 million tablets to their networks in Q4.

Unlike with tablets, there aren’t that many new phone customers out there. Carriers are basically poaching postpaid customers away from one another or upselling prepaid users on premium plans. So it’s pretty unreasonable to expect Sprint to post a quarter with a million new postpaid smartphone plans. But ever since Claure took over, Sprint has been focused on that segment, launching new promotions like its iPhone for Life leasing program and an offer to cut Verizon and AT&T phone bills in half.

Sprint said that due to those aggressive campaigns it had a record quarter of luring postpaid phone subscribers over to its network, but its competitors were also pretty successful at luring customers away from Sprint. Sprint’s churn rate, the percentage of customers that defect every quarter, for postpaid subscribers was 2.3 percent, double that of Verizon.

Sprint reported a loss of $2.38 billion last quarter, compared to a $1.04 billion loss a year earlier, but $1.9 billion was a one-time charge: Sprint wrote down the value of its brand. Sprint now has 55.9 million total customers.

During Sprint’s earnings call, Claure also gave an update on Sprint’s ongoing network upgrade. Sprint’s LTE network basically has three parts, each in a different phase of construction. Its main network on the PCS frequency band now covers 270 million people. Sprint has also been using its old Nextel airwaves to add LTE coverage to its footprint and that network is now in 60 percent of Sprint’s markets. Finally, the Spark network Sprint is building in the 2.5 GHz airwaves to add loads of capacity to the network now covers 125 million people.

In mobile, postpaid connections rise while prepaid declines

Over the last year, postpaid mobile subscriptions have been booming, while prepaid — once the strongest area of mobile growth in the U.S. — has been slowly dropping off, according to communications market researcher ShareTracker.

According to ShareTracker, postpaid net additions among the mobile carriers has increased 156 percent between 2013 and 2014. Postpaid used to mean contracts, but today it’s any manner of plan where you pay after your billing cycle. Meanwhile prepaid — service where you buy voice, SMS and data ahead of time  — saw an average decline of 35 percent, ShareTracker found.

unnamed

As you might expect, prepaid and postpaid tend to track the U.S. economy. During the recession, prepaid growth jumped dramatically, but now that the economy has recovered, postpaid is returning to growth.

Tiny T-Mobile isn’t so tiny anymore

T-Mobile is growing again, and not just from its merger with MetroPCS. With 44 million connections T-Mobile is filling out its seat in the country’s Top 4. Before too long it might even start challenging Sprint.

As Nextel mass exodus begins, Sprint reels customers back in

Sprint saw 1 million Nextel and Boost customers kick their phones to the curb in Q2. But Sprint managed to steer 600,000 of those departing subscribers to CDMA contracts or its prepaid brands. Helped by steady iPhone sales and its MVNO business, Sprint managed to grow.