Amid new growth in service revenue, Sprint tests digital sales strategy

In its earnings report, Sprint boasted of its digital efforts. (Sprint)

Sprint reported growth in wireless service revenue—its first such growth sequentially in more than four years—alongside slight gains in prepaid and postpaid customers during its latest quarterly earnings report. But the company also offered some insights into the new digital strategies it’s using to further reduce expenses and boost results.

The actions generally reflect the mantra of Sprint’s new CEO, Michel Combes, to “balance growth and profitability.” That’s a slight departure from Sprint’s general strategy during the past few years under previous CEO Marcelo Claure, in which the company sought to dramatically undercut the prices offered by heavyweights like AT&T and Verizon.

Nonetheless, Combes said Sprint would continue to be aggressive, though he said those efforts would likely be more targeted. He pointed to Sprint’s latest promotion that offers to lease an iPhone 8 for $8 per month. The offer is only available through the carrier’s phone sales and website, and is an example of the kind of low-cost, digital-only promotions that Sprint plans to use to spark sales.

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“We strongly believe in the digital platform to boost sales going forward,” Combes said during the company’s quarterly earnings conference call.

Interestingly, Combes said that Sprint’s weeklong offer of unlimited services for $15 per month was essentially a test of Sprint’s digital-only sales channel. The offer ended after a week’s time in June.

"The goal for us was really to test our digital capabilities,” Combes said. "It was in the market only one week, and it was only to test digital capabilities. So, it was clearly not a material driver of results for the quarter. That was not the intent. That was not the aim."

He added: "The digital channel is a great channel to address price-conscious customers as they want convenience in order to accept our service offerings … So, this delivered us good insight moving forward for how to leverage this digital channel. That was the aim, and that's what we've done."

Combes said that Sprint’s digital-only sales channel is one prong of the company’s efforts to continue to cut costs.

"We need to further optimize our cost structure, which gets harder and harder unless we innovate by leveraging digital capabilities and employ advanced analytics and artificial intelligence into our operations,” he said, adding that Sprint’s postpaid phone growth through its digital channels grew 50% year over year, though he declined to provide a specific customer figure.

Combes added that Sprint is also employing digital technologies in its customer care effort. "We now perform more than 10% of chats with ... agents using artificial intelligence,” he said.

Here’s a look at Sprint’s overall performance in its latest quarter:

  • Customers: Sprint reported postpaid phone net customer additions of 87,000 and prepaid net customer additions of 3,000. The company said 71,000 prepaid customers moved to non-Sprint-branded postpaid services during the period.
  • Network: Sprint said its 2.5 GHz services are now up and running on nearly two-thirds of its macro sites. The company also said that it counts more than 15,000 small cells on-air, alongside 7,000 strand-mounted 2.5 GHz small cells on Altice’s cable infrastructure in the first quarter. Sprint also said it distributed more than 65,000 2.5 GHz Sprint Magic Boxes during the period.
  • Financials: Sprint said its wireless service revenue grew sequentially for the first time in more than four years—AT&T and Verizon have also reported growth in their own wireless service revenues. Sprint’s net income clocked in at $176 million, and its net cash provided by operating activities reach $2.4 billion.
  • Capex: Sprint said it spent $1.1 billion on capex in the quarter and that it remained committed to spending between $5 billion and $6 billion for its fiscal year.

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