Sprint, Taking Aim at AT&T, Offers DirecTV Subscribers Free Year of Cell Service
August 27 2015 - 4:13PM
Dow Jones News
By Ryan Knutson
Sprint Corp. is taking the wireless price war to a whole new
level.
The carrier said it would give away a free year of wireless
service to DirecTV subscribers who switch to Sprint--a direct
attack on AT&T Inc., which recently completed a $49 billion
acquisition of the satellite TV provider. Bringing DirecTV
subscribers onto AT&T's wireless service is central to the
carrier's logic for the acquisition.
Sprint's offer, which is only available from Aug. 28 through
Sept. 30, is a bold move in an industry already locked in a price
war. Last year, T-Mobile US Inc. began paying customers hundreds of
dollars to switch services, a move other carriers, including
Sprint, followed. AT&T and Verizon have fought back largely by
offering larger data buckets at similar prices.
The offer takes direct aim at AT&T by saying: "Don't get
locked into the high prices of AT&T for your wireless
service."
AT&T didn't immediately respond to request for comment.
"I think the position to celebrate the merger by offering one of
their subscriber bases an attractive offer is just fun," said Kevin
Crull, Sprint's chief marketing officer.
Sprint, which has been losing subscribers for years, has only
recently begun to reverse the outflow, adding 320,000 mainstream
customers in the three months ended June 30. Most of those
additions were less profitable tablet subscriptions, and the
company actually suffered a net loss of 12,000 of the most
lucrative handset customers. The carrier hasn't posted an annual
profit since 2006, and burned through $2.2 billion of cash in the
latest quarter.
"The word 'crazy' comes to mind," said senior analyst Craig
Moffett of MoffettNathanson. "They get a tip of the hat for making
a marketing splash, but it is reckless for a company that is
burning through its remaining liquidity at such a rapid rate to now
start giving away service for free."
Sprint said it would give DirecTV customers switching to Sprint
a plan with unlimited talk, text and up to 2 gigabytes of data a
month, plus a one time $36 activation fee. The price doesn't
include the cost of a smartphone. Sprint normally sells plans with
unlimited talk, text and data for $60 a month plus the cost of a
smartphone. After a year, Sprint says bills will return to an
equivalent plan starting at $50 a month.
Mr. Crull said the offer wouldn't be any more or less expensive
than other promotions. Mr. Crull said the carrier would also earn
money from customers who pay $15 per gigabyte when they exceed the
2 gigabyte data limit. Because DirecTV customers have also already
passed credit checks, he believes most will be good customers.
Sprint has invested in improving its wireless network and sees
the move as a demonstration of confidence. "Once people are now
trying our product and trying our network that they're finding a
dramatically different experience from even a year, or especially
two years ago," Mr. Crull said.
Write to Ryan Knutson at ryan.knutson@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
August 27, 2015 16:58 ET (20:58 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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