Virgin Mobile. Instead, they are looking at introducing a new strategy for the brand sometime in the future. With this announcement, many couldn't help but look at Sprint's struggle with their prepaid arm; especially since brands like MetroPCS and Cricket Wireless seemed to have bagged the prepaid market. Many even thought that Sprint would be folding the prepaid network.
Despite these, however, the company's CEO Marcelo Claure has reasoned that their decision to back away from the prepaid sector was because they wanted to focus on an area where they wanted to grow. And in a way, they are also keeping customers that matter for the business.
Immediately after Claure's announcement, T-Mobile took this opportunity to attract those customers under Sprint's Virgin Mobile brand to draw them into switching to MetroPCS. Taking to Twitter to express their sentiments, the company sent out a tweet that read "Hey @VirginmobileUSA customers, we think you matter! Get more value, a bigger, faster network, and two free phones!"
Announcement was no shocker to iSpot.tv
While this announcement may come as a shock to most people, analysts are no longer surprised by it. As a matter of fact, iSpot.tv has noted that the company did not spend any money on advertising Virgin Mobile on both third and fourth quarters of 2015 whereas they spent $1.6 million and $3.4 million on the first and second quarters, respectively. Yesterday's announcement hinted at the possibility of Sprint concentrating on promoting Boost Mobile this year. But based on the information gathered by iSpot.tv, this isn't the same as well. Last year, they spent $1.2 million during the third quarter and just $144,000 in the fourth quarter. Meanwhile, its competitors spent a whopping number for advertising. T-Mobile spent $19.6 million (third quarter) and $34.6 million (fourth quarter) for MetroPCS while AT&T spent $19.7 million (third quarter) and $63 million (fourth quarter) for Cricket Wireless.
Based on the the information released by iSpot.tv, there's no surprise why T-Mobile and AT&T has been aggressive with their success in the prepaid market. With their spending, these two companies have been able to add in new prepaid customers. T-Mobile had a total of 595,000 new prepaid customers in the third quarter. AT&T, on the other hand, added in 466,000 prepaid subscribers in the third quarter and 469,000 net prepaid customers in the fourth quarter. These numbers have increased compared to the ones they gained from the 2014.
An analyst from 556 Ventures has noted that there has been a 2.3 percent decline of customers on Sprint's prepaid plans from 2013 to 2015. When Sprint's focus was on prepaid, things were different. And with the changes in the market, it has faced a number of competitors that were doing their best to outrank Sprint. Even though Sprint has placed second among prepaid carriers, the gap between them and T-Mobile has widened so much that they lost around 1.2 million subscribers in just the last three quarters, according to Jackdaw Research's Jan Dawson. Meanwhile, its competitors gained thousands. And with the option of equipment installation plans (EIP) offered by major carriers like T-Mobile and AT&T, the prepaid sector has become a tough market to conquer. With this option, customers are able to pay off their devices on a monthly installment instead of the traditional two-year postpaid contract. This has resorted to an aggressive prepaid market as there is no more real growth to it. Verizon saw this beforehand and decided to leave the prepaid brand rivalry to other carriers.
So what will Sprint do with its prepaid market?
It's important to remember that Sprint's prepaid arm consists of four different brands-- Boost Mobile, Virgin Mobile, Sprint Prepaid, and Assurance Wireless. All of these brands have a specific niche market and plans to offer for each customer. And from the start, they didn't have a clear strategy for their prepaid arm. As a result, they have endured a more fragmented strategy compared to other carriers.
A wise decision for the company was to consolidate the brands, which is probably what is currently happening as Sprint is shifting Boost Mobile into its main prepaid brand. Just yesterday, Sprint reported adding half a million new customers. Perhaps Claure's new strategy is working, but it could take some time before Sprint's prepaid can be as competitive as MetroPCS or Cricket Wireless. Well, at least not right away this year.
Source: Fierce Wireless