Sprint's Hesse discusses the carrier's growth plan

dan hesse sprint hot seatwith Sprint Nextel CEO Dan Hesse

Sprint Nextel just reported third quarter earnings that showed continued success in the prepaid sector but another massive loss--801,000 subscribers--on the postpaid side. Nevertheless, Sprint CEO Dan Hesse was upbeat about the progress the carrier has made on gross additions. He acknowledged Sprint still has a long way to go, and in an interview with FierceWireless associate editor Phil Goldstein, Hesse discussed Sprint's path back to subscriber growth, consolidation in the wireless industry, the FCC's action on net neutrality and new dual-mode 3G/4G phones coming next year.

FierceWireless: How and when are you going to get back to postpaid subscriber growth?

Hesse: We haven't provided that forecast yet. We clearly are focusing as a company first on total subscriber growth, and revenue growth, and then postpaid subscriber growth will probably follow that. So that is part of our plan, but we haven't given a forecast or guidance yet with respect to when we expect that to happen.

FierceWireless: You said you can't just focus on churn reduction. What is the overall strategy?

Hesse: You're exactly right. It's to do both. It's to both improve churn and to improve gross adds. And so if you're to go back, I joined the company basically in Christmas of 2007. In 2008, we were the only major U.S. wireless carrier that decreased churn. And so we brought that down. But it's kind of stabilized. We have to take it to the next level. So there's still opportunity for us to lower churn further--and we have to do that.

But since the end of 2005, really since the merger [with Nextel], our gross adds have been declining steadily, to the point where they had declined over 2 million gross adds per quarter. That's a big decline. And that's really been the major story with respect to our net add number, it's been the decline in gross adds. And you have to do both. I hate to do the sports analogies, but to win you have to have a good defense and a good offense. So we have been beginning to shore up the defense. And again, seven consecutive quarters of improved customer experience. A lot of things we were doing to get churn better. Again, we still need to do a lot more, and there's more opportunities there.

This quarter was not only an uptick in gross adds, but was the biggest uptick sequentially since we've had records. And the reason I said over five years is we don't have pro forma records that go back further than that. And on a year-over-year basis, it's the biggest improvement in four and a half years. We have to make further improvements in churn, and also increase gross adds. They'll both need to contribute, significantly, to get our net add numbers positive on the postpaid side. And of course what's helping mitigate the decline in postpaid, from a revenue perspective and an earnings perspective, is the strong growth we're getting in prepaid. Continued

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