Sprint, Taking Aim at AT&T, Offers DirecTV Subscribers Free Year of Cell Service--2nd Update
August 27 2015 - 6:01PM
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, and it has been
offering DirecTV subscribers up to $500 a line if they switch to
AT&T, and it has been offering DirecTV subscribers up to $500
per line if they switch to AT&T
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 Communications Inc. 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."
"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.
AT&T called Sprint's move an act of a weakened
competitor.
"This ranks right up there with a desperate Hail Mary pass to a
petite defensive lineman," said Brad Burns, an AT&T spokesman.
"With Sprint's network and the many asterisks on this deal, we're
feeling good about our offers."
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 a 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 18:46 ET (22:46 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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