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Prepaid drag sends Sprint stock in a nose dive

Sprint investors reacted negatively to release of its full fiscal Q2 results, with the carrier’s prepaid biz set to lose 2M customers in current quarter

Highlighting the continued volatility around anything related to Sprint, the carrier’s stock gave back a good chunk of its recent run as investors appeared to react negatively to more details on the carrier’s latest quarterly performance.

Sprint’s stock (S) sunk more than 6% on Tuesday, following release of the carrier’s full second-fiscal quarter operating results. The full unveiling looked to include just a bit more detail into the carrier’s ongoing operations, with Sprint having previously released a significant portion of its Q2 operating results last week, which pushed the carrier’s stock to a new 52-week high.

In a call with analysts following release of its full results, Sprint management hinted at a more moderate tone in terms of performance in the current quarter. That included comments from CEO Marcelo Claure that the carrier’s struggling prepaid business could lose up to 2 million customers during fiscal Q3 as the carrier looks to align customer quality roles between its various prepaid brands.

“Each of our prepaid brands has different churn rules and retention programs, and we’re now bringing them all into the same program, which will be tighter than any of the brands were previously,” Claure said, according to a transcript of the call from Seeking Alpha, adding the carrier expected to basically lose customers generating little to no revenue.

The carrier said it lost 427,000 direct prepaid customers in Q2, which built on the 331,000 segment customers lost during the previous quarter. By comparison, Sprint rival T-Mobile US attracted 684,000 net connections during the quarter.

Claure also seemed to hint that plans for the relaunch of its Virgin Mobile USA brand could be pushed off until early next year. Claure had previously stated the carrier planned to alter its prepaid model on Sept. 1, which followed up on plans to take its Virgin Mobile brand in a new direction, including the move of the division headquarters to Kansas City, Missouri.

One of the few new operating metrics released this week included average revenue per user numbers, which came in mixed similar to what rivals have been reporting. Postpaid ARPU dropped from 53.99 during the same quarter last year to $50.54 this year, while the prepaid ARPU dropped a more modest 35 cents from $27.66 to $27.31. But, when taking into account device billing that has become common with postpaid monthly installment plans, average billing per user surged $1.02 year-over-year to $71.69.

Claure said the carrier expects to improve ARPU results moving forward as more customers sign up for its recently launched Unlimited Freedom plans instead of its previously hyped “50% off” promotion. The discount offer was initially launched in late 2014 under the “Cut Your Bill in Half Event,” before being brought back late last year for an extended stay.

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#Sprint #SprintMVNO #Boostmobile #boostmobilestore #VirginMobile #quarterlyearnings #Q3

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