Sprint shows improvement, but can it turn around fast enough?

Hesse acknowledged Sprint’s historic poor customer service image several times, attributing it to low ratings achieved two years ago and an influx of negative press coverage. Improving this image has been a key focus for Hesse, who was brought on board for this reason, although he said he would like to not record another ad campaign featuring him causally extolling the benefits of Simply Everything. Sprint ramped up this ad campaign in the fourth quarter and expects to see the benefits in churn reduction going forward.

“One reason you don’t make rapid changes is you do build brand equity over time with a consistent look and feel,” Hesse said. “You do try to keep some consistency. In Q4, the look and feel didn’t change, so brand recall remained high, but as the economy started to deteriorate, Simply Everything started to focus on doing the math in ads. So we can tweak ads on the message that seems to be resonating.”

Moffett said that the one silver lining may be the average revenue per user (ARPU) was slightly better than expected, coming in at $56 for postpaid, down 3.4% from last year, and $30 for prepaid. Forty-one percent of Sprint’s sales came from qwerty devices, and its PDA and touch devices, which generate around $80 in APRU per month, grew by 125% year over year. Sprint also now certifies 260 open devices on its network that don’t carry the Sprint brand.

Compared to where Sprint has come from, the quarter wasn’t so bad. However, the economy has been the wild card that threw off the progress for Sprint, as well as the rest of the wireless industry. In the face of a vicious recession and rapidly approaching subscriber saturation, overall US wireless industry net subscriber additions were 32% lower in the fourth quarter than a year earlier, Moffett said, describing Sprint’s precarious situation as the water getting drained from the pool just as the company learns to swim. With churn still relatively low at most of Sprint’s competitors, all of which have pledged share gains, there might not be many consumers left for Sprint regardless of its new brand image and customer-service improvements.

“As the market opportunity contracts, any real sign of a turnaround at Sprint would decisively undermine targets at Sprint's competitors and would very likely trigger an aggressive competitive response,” Moffett said. “Despite heavy marketing and a more stable share of gross additions, market dynamics are working against a turnaround at Sprint.”