Hello! And welcome to our Friday column, Worst of the Week. There’s a lot of nutty stuff that goes on in this industry, so this column is a chance for us at RCRWireless.com to rant and rave about whatever rubs us the wrong way. We hope you enjoy it!
And without further ado:
Numbers have become an integral part of Sprint. Sure, numbers are important to all mobile operators, but for Sprint those digits have become what it’s known best for.
Sprint this week released full results for its third fiscal quarter, which ended Dec. 31, also known as the fourth quarter for those that don’t like to play “quarters.” As part of that release, Sprint unveiled a slough of numbers providing more detail into its previously announced results (don’t ask) as well as numbers showing its financial performance(?).
To me, the most telling of those numbers – and the reason why numbers have become so important to Sprint – was the $1.9 billion Sprint took in a one-time write down. Now, we all now what these one-time write-offs are, right?
Exactly.
In this case, Sprint was required to slash its earnings by $1.9 billion because its name is no longer worth what it was thought to have been worth. The one thing that signified Sprint as being Sprint to consumers has somehow lost $1.9 billion in “official” value. All of those Sprint signs, labels and bumper stickers are now probably worth less than the medium they are printed on.
According to The Wall Street Journal, Sprint had valued its brand at $5.9 billion one quarter previously, which would seem to have now sunk to $4 billion or so.
Now, I am not sure how all of this brand-value hooey is tabulated, nor do I think you can put a real value on a brand. I accept that the word google now has a different “value” than it did 20 years ago, but putting a number on that value is something that seems of most interest to those who need to associate a number with everything.
For instance, Forbes recently released a list of the 100 most valuable brand names, with Sprint notably absent from that list. No. 100 on the list was Dell, which has a brand value of $5.8 billion. AT&T was No. 16 on the list with a brand value of $24.9 billion; Verizon was No. 22 with a brand value of $21.6 billion. Milward Brown has a similar list, which had AT&T at No. 8, valued at $77.8 billion; Verizon at No. 11, valued at $63.5 billion; and T-Mobile US at No. 27, with a brand value of $28.8 billion. Sprint? Not in the top 100.
Do with those numbers what you will, but the main takeaway from it all is that Sprint’s brand value pales in comparison to that of its rivals in a significant way.
(Tangentially, I don’t even want to consider the negative value being generated by Sprint buying 1,750 RadioShack retail stores. Replacing the RadioShack name on a building with that of Sprint is probably not going to be the value generator a building owner was hoping for, and I can only guess will create some weird Poltergeist, building-eating end-game.)
That’s not to say that the Sprint name is totally worthless. There are still tens-of-millions of people sending in payments on a regular basis to Sprint, and even Sprint’s management was touting the improved gross customer additions and increased floor traffic the carrier witnessed during the final three months of last year.
But, this move basically tells the market that names like “Sprint” have lost value in the eyes of consumers, who for the most part are now only interested in Sprint providing better value – smaller numbers – on their cellphone bill each month.
I know there were rumors at one time of Sprint bringing back the Nextel brand for an enterprise-focused offering, with the thought being that Nextel had more cache in the enterprise space than Sprint. Perhaps it’s time to dig that rumor back out, but this time with a wider scope.
OK, enough of that.
Thanks for checking out this week’s Worst of the Week column. And now for some extras:
• Speaking of numbers, late last Friday, well after this weekly column was put to bed, the Federal Communications Commission announced the big spenders in its fantastically successful Auction 97 proceedings. And, to the surprise of few, the four biggest spenders were three of the nation’s four largest wireless operators and Dish Network.
The three established operators that picked up spectrum were, as previously stated, of no surprise as all three had said they planned on targeting the spectrum up for bid.
AT&T made the biggest impression by spending more than $18 billion on spectrum in the 1.7/2.1 GHz band, where it had previously owned spectrum before having to give most of it to rival T-Mobile US when it failed to acquire its smaller competitor. And we all know that T-Mobile US in turn used that spectrum to power its LTE service and corporate revitalization that has since been an expensive thorn in the side of AT&T Mobility. That failed deal is like the WOTW gift that keeps on giving.
Alternatively, T-Mobile US spent a paltry $1.78 billion on licenses, which was only about half of the $3 billion in cash AT&T also had to fork over for not putting a ring on it. It never gets old.
But, the bid auction winner was Dish, which managed to game the system that also allowed the company to fortify its spectrum hoarding “issue.” Sort of like signing up for free introductory magazine subscriptions just so you can continue filling your house with piles of magazines. Of course, these magazines are worth billions of dollars and if put to use could actually be a benefit to the American people. Same dif.
• Finally, FCC Chairman Tom Wheeler this week released some of the specifications on his plans to tackle the seemingly un-tackleable net neutrality issue. Those specs showed that the FCC plans to bring all Internet regulations in-house, to the joyous rapture of some, and cliff-jumping frustration of others.
The best part was where Wheeler basically said: “Wireline, wireless? It’s all the same to me.”
I am guessing in hindsight that the once bright idea to challenge the federal government on how it regulates an Internet service provider’s right to charge whatever it wants for accessing the Internet is not looking so hot.
I welcome your comments. Please send me an e-mail at dmeyer@rcrwireless.com.
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