Speaking at its annual investment community meeting in New York a day after reporting fourth-quarter and full-year 2003 results, Sprint Corp. said it expects service revenues in its wireless division to increase in the high-single digits this year, driven by a larger customer base, stable average revenue per user aided by increased contribution from data services and a strong gain in wholesale services.
Sprint also said it expects wireless losses per share of between 13 cents and 18 cents this year, with results turning to a return of 20 cents to 30 cents per share in 2005. The company’s wireless division posted a loss of 66 cents per share last year, which was a 14-percent increase from the 58 cents per-share loss Sprint PCS reported in 2002.
Sprint added it expects wireless capital expenditures to increase to $2.4 billion this year from the $2.15 billion spent in 2003, with the increased spending targeted at both improving network capacity and coverage and providing new capabilities.
Sprint also announced a five-year, multibillion-dollar customer-service agreement with IBM Business Consulting Services as part of what the telecommunications company said was the core of its new customer-service strategy designed to “significantly improve its customers’ service experience.” The outsourcing arrangement is expected to save Sprint $550 million over the next three years.
In addition to outsourcing customer care, IBM will also take over management of Sprint’s existing vendor-operated call centers and will assume management of the Sprint-owned Nashville, Tenn., call center. Sprint said it would continue to operate its remaining customer-service centers.
“This deal holds a lot of promise for Sprint,” said Gartner research director Fran Karamouzis, who noted working with a proven customer service provider in IBM should help Sprint re-engineer its customer-care functions.
In a related deal, customer-care service and billing provider Convergys Corp. signed a five-year agreement with IBM to provide customer-care services as part of IBM’s deal with Sprint. Convergys said the deal includes assuming responsibility for Sprint’s Nashville customer-care facility and its 1,100 current employees.
Convergys, which has provided billing support for Sprint PCS since 1996, announced last year that it would support the carrier’s plan to move its billing system, which Convergys previously had provided in-house to Sprint. Convergys noted at the time that its contract with Sprint PCS ran through the end of 2004 and that Sprint PCS had until March 31, 2004, to exercise a contract extension.
Those plans were eventually scrapped late last year when Sprint signed a new seven-year deal with Convergys to support Sprint PCS customers on Convergys’ billing platform.
Analysts noted the deal should prove beneficial for all parties involved and help bolster Convergys’ presence as well as its long-term financial security.
“The new agreement will increase the relationship between Convergys and Sprint substantially, enhancing customer service for Sprint and augmenting revenue for Convergys,” said Frost & Sullivan’s billing and customer-care program leader Daniel Longfield. “This deal also greatly increases the chances of Sprint renewing or extending their current contract for outsourced billing with Convergys.”
