Sprint stock hits 20-month high, as management talks potential rate plan changes tied to the next iPhone launch, tests lower-priced unlimited data
Sprint has had its fair share of ups and downs over the past several years, but reaction to the carrier’s latest quarterly results showed Wall Street is on board, at least for the short term, with the carrier’s current direction.
Sprint’s stock soared Monday after the carrier released first fiscal quarter results showing positive customer growth, improved retention against rivals and continuing strong management of its fiscal resources.
The carrier’s stock (S) surged as high as $5.96 per share, before closing up nearly 28% for the day at $5.90 per share. Sprint stock has not seen such levels since early November 2014, which followed the release of its fiscal Q2 2014 results.
In addition to what appeared to be a steadying of the ship, Sprint management highlighted a strong focus on network and operating efficiencies.
Sprint claimed it managed to extract $550 million year-over-year in operating expense, moving on its plans to further reduce costs. CFO Tarek Robiatti said the carrier remained on track to hit a $2 billion sustainable reduction in run rate operating expenses coming out of fiscal 2016.
While capital expenses for the quarter came in under forecasts, Sprint said it expects the trend to increase throughout the fiscal year as it secures permits tied to its network densification efforts. The carrier noted the small cell-focused densification efforts produce a 20% savings compared to traditional macro deployments, though typically trade increased capacity over a small geographic location for broader coverage.
“We have to get out of the mindset that the more you spend the better your network is,” noted Sprint CEO Marcelo Claure. “We are going to manage every dollar we spend and provide a great service for our customer.”
Sprint also highlighted what it terms software investments tied to its carrier aggregation moves. These allow the carrier to bundle its various spectrum bands and multiple channels into a single, larger channel designed to increase efficiency of used spectrum, though customers are required to have enabled devices in order to experience the performance benefit.
Ericsson network management deal to expire?
The carrier also noted it was looking to keep greater control of its network management in-house, hinting that its current network management agreement with Ericsson could be allowed to lapse. That agreement was initially signed in 2009, ahead of the carrier’s invasive Network Vision program.
Sprint said its LTE Plus offer, which includes services running across its 2.5 GHz spectrum holdings, hit 237 markets at the end of the quarter, with its high-band spectrum now carrying the “highest percentage” of the carrier’s LTE traffic.
Verizon buy of Yahoo fails to impress
Claure also downplayed the recent move by larger rival Verizon Communications in bolstering its “over-the-top” play with the acquisition of Yahoo, noting Sprint currently has no interest in trying to compete against OTT players. That includes the mobile video realm, where Claure said the carrier’s continued offer of “unlimited” data services is Sprint’s answer to zero-rated video plans by rivals.
“We have an unlimited plan that basically zero rates all content on our network,” Claure said, adding the carrier is also comfortable with the current $75 per month single-line rate plan tied to the unlimited data feature. Published reports have noted Sprint is testing a lower priced unlimited plan in at least one market, which Claure said was just one of many such market-specific trials the carrier is always conducting.
iPhone-related pricing changes afoot?
Moving forward, Claure said the carrier could look to replace its current “50% off” promotion targeting rivals in the coming weeks, perhaps tied to the launch of a new iPhone model from Apple. Sprint said customers porting over from rivals to take advantage of the rate plan promotion have, in general, been selecting relatively larger data plans and thus not seeing a true 50% decrease in their monthly bill.
Sprint’s wild Wall Street ride is set to be put to the test later this week as both Verizon Wireless and T-Mobile US release their fiscal Q2 results that could provider greater color on how Sprint really performed against rivals.
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