Sprint Nextel Corp.s limited experiment of offering subprime subscribers
allyoucanuse cellular voice minutes and text messaging appears to have been a
success, with the company expanding the service to a dozen states and adding
unlimited Web surfing.
Sprint has offered the unlimited program through its Boost Mobile brand in Texas
and California since this spring.
The company said 100,000 people signed up for the service during the second
quarter, paying $45 to $55 a month to make unlimited local and longdistance
calls while calling from their home calling area. Adding unlimited texting costs
an additional $5 a month.
Sprint, based in Reston, Va., with operational headquarters in Overland Park,
Kan., announced Tuesday that it has extended the unlimited service to 10
additional states, including Alabama, Arkansas, Florida, Georgia, Louisiana,
Mississippi, Nevada, North Carolina, Oklahoma and Tennessee.
With the metrics achieving to the expectations, weve decided to go to the next
phase of expansion and that was to the South, said Michael Lanzon, vice
president for sales and distribution for Irvine, Calif.based Boost.
He declined to say how many more customers signed up in the third quarter
because Sprint is expected to announce quarterly results next week.
Besides the unlimited calling, the company said that starting on Nov. 12 it
would begin offering unlimited Web browsing for an additional $5 a month and
allow subscribers to expand their local calling zone for another $5 a month. For
example, a customer in Houston could expand their calling area to include
Calls outside their local zone cost 15 cents per minute.
Boost Mobile subscribers dont sign an annual contract, instead paying upfront
for their service monthtomonth. Initially modeled as a youthoriented brand,
Sprint Nextel has attempted to use Boost Mobile to grab consumers with spotty
credit who might not qualify for regular service, many of whom Sprint
Nextel has jettisoned by increasing its credit requirements.
Analysts have voiced concern that the unlimited service could encourage more
lucrative Sprint customers who pay their bills at the end of the month to switch
down to the cheaper service. They also said it wont help Sprint catch up to
industry leaders AT&T Inc. and Verizon Wireless, as neither is as interested in
attracting subprime customers.
But they said Sprint can stave off some customer losses to MetroPCS
Communications Inc. and Leap Wireless International Inc., which offer similar
I think its a defensive move, Jonathan Atkin of RBC Capital Markets said
Wednesday. Better to see some modest cannibalization and do it yourself than see
a competitive loss to those competitors.
Sprint Nextel shares, which have traded in a 52week range of $16.93 to $23.42,
closed down 16 cents at $17.49.