Will Attracting New Customers By Driving Margins To The Ground Help Sprint?

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After losing customers to other carriers quarter after quarter, Sprint Corporation S has finally bitten the bullet. The company today launched a massive campaign, through which it is trying to lure customers away from AT&T, T-Mobile and other carriers by promising to cut their bills by half. Sprint’s competitor T-Mobile has been using the same strategy since quite some time.

 

Bloomberg’s Betty Liu, Alex Sherman, and Olivia Sterns recently discussed Sprint’s new strategy and what it impact it will have on the company’s margins.

 

“It’s pretty amazing I think really. Sprint needs customers, they have been haemorrhaging customers quarter after quarter, they are losing money. So, they have to take drastic measures, they have a new CEO and this is a drastic measure,” Sherman said.

 

“So, Spint has looked at what T-Mobile has done and said ‘huh … they have had a lot of success with this, they add customers every quarter.”

 

Liu thinks that although the campaign is good, “but it’s all at what cost? So, how much is this going to eat into their bottom-line and can they really afford that because they have lots of capital outlays. How much can they really afford to protect their margins, but at this point it’s all about grabbing eyeballs.”

 

Sherman provided a ‘cynical’ point of view on this, saying “If you drag your margins to the ground, you make your company long-term look worse. Regulators would be more ok with an eventual Sprint – T-Mobile merger.”

Shares of Sprint were recently trading at $4.74, up 0.53%.

 

 

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