Analysts are predicting that Sprint will add 17,000 customers in the next quarter thanks to its offer for a free year of service for switchers.
It’s a postpaid plan that, when you bring your own device (BYOD) and move to Sprint, will give you a year of unlimited talk, text and data. And according to Wall Street analyst Jeffries, it’s a solid plan.
"Sprint recently introduced free year of service offer for switchers (BYOD); though just 1% of gross adds thus far, that would equate to an estimated 17k net add benefit in 3Q if that uptake rate continues,” the firm said in a research note.
Sprint confirmed this on its recent earnings call, noting that this result “was in line with our expectation, and has provided good insights into digital sales and marketing."
According to Jeffries, there has been lower postpaid churn across the industry thanks to promos like these and other deal offers that are wooing no-contract customers over to subscriptions.
“Against the backdrop of increased competition and industry maturity, the recent quarter surprised, with industry handsets coming in above expectations,” the analysts said. “However, gross adds were surprisingly better, which begs the question: Where are these subscribers coming from? Some theorize that prepaid migrations could be a factor in the postpaid momentum, though results do not fully support this view.”
However, prepaid will have an important role to play as the U.S. wireless market continues to be hyper-competitive, it added. To wit: “While prepaid gross adds [for Sprint] dropped more than in prior years, churn also came down, resulting in 415,000 prepaid net adds (the 6th consecutive quarter of 400,000-plus adds).”
Another free year of service that Sprint has out there could help that momentum continue. The prepaid Virgin Inner Circle plan through the Virgin Mobile brand offers a year of unlimited data for $1 for the year, for new customers who buy an iPhone, or for current Virgin users who upgrade to the Apple device (it’s $50 per month after the initial one-year promo period). The deal is meant to solidify Virgin’s recently announced iPhone-only strategy, while diversifying Sprint’s prepaid business.
Sprint recently extended the signup period for its Virgin Inner Circle offering for another month, to Aug. 31, with executives during the earnings call pointing to the model as an experimental success for its prepaid and digital strategies.
There’s no word on whether customers might flee in droves after their initial $1 year is up—Virgin Mobile’s standard $50 per month per line is undercut by other prepaid offers—but for now, the promotion as well as the postpaid plan looks to give Sprint positive headwinds for Q3.
Article updated Aug. 18 to correct information on the specific offer of Sprint’s free year of service for switchers who bring their own device.