Sprint Nextel CEO Dan Hesse said that the company's Boost Mobile prepaid unit is not cannibalizing its postpaid operations. In an interview with the Associated Press, Hesse noted that only "a low single-digit percentage" of Sprint's new prepaid subscribers are coming from the postpaid side.
When Boost first introduced its $50 unlimited prepaid plan earlier this year, there were fears that it might cut into Sprint's postpaid business. The prepaid operations have boomed, but Sprint has continued to lose contract customers at a steady clip. In the second quarter, Sprint lost 991,000 net postpaid subscribers and gained 938,000 prepaid subscribers.
In the AP interview, Hesse predicted the balance would shift back to postpaid once the economy improves. He reiterated that Boost remained a profitable business for Sprint, and said that there were no plans to cut the price of Boost's unlimited play in order to match falling prices from the likes of Leap Wireless, MetroPCS and TracFone Wireless. "We think it's priced where it should be," he said.
Both Leap and MetroPCS suffered from weaker financials and slowing net subscriber additions in the second quarter. Yet the prepaid market continues to be a growth driver for some carriers; of T-Mobile USA's 325,000 net subscriber additions in the second quarter, 268,000 were prepaid.
- see this AP article
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