Sprint Offers Credit to Customers Leasing iPhones

U.S. operator Sprint has created plans called iPhone for Life, which enable its customers to lease all iPhone 6 models starting at US $20.00 per month for the 16 GB option and all iPhone 6 Plus models starting at US $25.00 per month for the 16 GB option for 24 months. These options are also available starting at US $30.00 and US $35.00 per month for 12-month leases. Starting on 14 November, subscribers may also lease any iPhone 5S model for 24 months with a monthly payment starting at US $18.00 for the 16 GB model. From 10 October to 15 January, existing Sprint customers will get a “Loyalty Service Credit” of US $15.00 when they lease any of these iPhones. The promotional credit can be applied to the monthly cost of leasing one of the devices, which results in a monthly fee of US $5.00 for the iPhone 6 and US $10.00 for the iPhone 6 Plus. After the contracted period, users can continue leasing the phone on a month-to-month basis, return it and discontinue the service, purchase the phone or exchange the old iPhone for a new one. Sprint customers continue to receive the US $15.00 credit beyond 15 January as long as they have an active lease and a qualifying plan.

Sprint continues to aggressively create promotional offers for new and existing customers. However, this promotion differs from most of the operator’s previous promotional offers in that it is directed at current customers and does not target the pricing or content of a plan. As U.S. operators, including Sprint, have been moving away from 24-month contract phone subsidies and toward a no-contract phone financing model, customers have gained the ability to switch operators with greater ease, but at the cost of higher device expenses.

Sprint’s promotional leasing offer is a unique method, currently not offered by any of the other U.S. MNOs, of returning to the subsidized phone model for customers who do not want to pay full retail price for a phone that they will likely resell. For example, leasing the iPhone 6 under Sprint’s promotion will cost a total of US $120.00 over 24 months compared to the total US $650.00 if purchased or financed from any of the MNOs. In addition to the highly attractive low phone expenses, Sprint subscribers will not need to worry about reselling an old device once a new model is released and dramatically devalues it. On the one hand, Sprint’s one-of-a-kind offer could reduce churn, as the cost of buying out the phone in order to switch operators will likely be viewed as prohibitive by many subscribers. On the other hand, the generosity of the offer coupled with the fact that even the iPhone 5S is included may indicate that fighting churn is particularly important for Sprint at the present time.

The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues:  http://www.tarifica.com/TarificaAlert.aspx

Sprint Doubles the Data for Business Customers

On 10 October, U.S. operator Sprint began offering its Business Share Plan customers with installment billing double the normal amount of data, delivering between 240 GB and 800 GB per month to those with 50 to 100 lines. This promotion, which runs until 31 October, will cost US $50.00–$150.00 less than a similar promotion from AT&T. Sprint will also waive the US $15.00 access fees for unlimited talk and text through the end of 2015 for customers who bring their number to Sprint and activate a phone. The cost of the new Business Share Plan offerings range from US $400.00 per month for 240 GB of data to US $1,350.00 per month for 800 GB of data.

Clearly, Sprint is vying for market share in the business customer segment by offering more value. When it comes to subscriber value from mobile plans, data is the most important metric, because voice minutes or SMS can be replaced with OTT services such as WhatsApp and Skype, whereas there is no easy substitution for cellular data. For example, the formula for our Tarifica Score™—an objective measure currently available for consumer plans only—weights data more heavily than other plan elements. For MNOs, offering more data—or similar amounts of data for less money than competitors, for example, Sprint’s promotion against the comparable AT&T promotion—is an excellent way to offer more value for customers.

However, there are other factors that go into the formula that will nonetheless work against Sprint. The company’s network coverage leaves a lot to be desired, so this promotion while appealing, will not necessarily end up giving Sprint a competitive advantage over AT&T. In addition, Sprint suffers from slower internet speeds than those of its counterparts, which exacerbates the problem. This promotion is a step in the right direction, but it still may not be enough to offer better value for customers than other business plans. 

The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues:  http://www.tarifica.com/TarificaAlert.aspx

America Móvil Considers Structural Changes as Regulatory Pressure Mounts

Mexico’s leading MNO, America Móvil, has formed a committee of senior leaders charged with evaluating the “various structural, commercial, technological and other options available to it, as well as the opportunities offered by the new Mexican regulatory framework,” according to a company release. America Móvil currently controls an estimated 70 percent of the Mexican mobile market, and its landline unit, Telmex, has 80 percent of the country’s fixed line subscribers. Studies from the OECD have estimated that this position costs the Mexican economy as much as US $25 billion per year (2 percent of the country’s GDP). The Federal Telecommunications Institute found America Móvil to be dominant last year; the company is contesting this finding in court. Politicians, including Mexican president Enrique Peña Nieto, have spoken out against the company and won approval in the legislature for harsher penalties for dominant companies.

The formation of this committee likely serves a twofold purpose. First, it is a publicity-generating play (virtually all of the senior leadership from both America Móvil and Telmex are represented on the committee) aimed at reassuring skittish investors. America Móvil has seen its shares fall 15 percent in the year since the company was declared dominant. By forming the committee, America Móvil gives stakeholders the impression that it is taking its fate into its own hands. This announcement was paired with a larger move aimed at assuaging investors when the company’s chairman and chief executive, Carlos Slim, used his holding vehicle to purchase AT&T’s 8.3 percent stake in the company for US $5.7 billion, signaling faith in the company’s future and avoiding a dilution of company value on the market.

Second, it is almost a certainty that America Móvil will lose its appeal of the dominant ruling, and it appears to be only a matter of time before Mexican authorities impose further strictures on the company, extending as far as forcing a breakup. To preempt such an outcome, we expect America Móvil to try and spin off some of the less profitable elements of its business—particularly those that serve rural and poorer areas—to reduce the company’s market share to below 50 percent without significantly affecting revenues. Telmex attempted a similar measure in 2011 with Telmex Social, but the move was rejected by regulators. America Móvil is likely considering whether it can include the right package of concessions to make a reprise palatable to mobile regulators in the near future.

 

“The ultimate consequences of America Móvil will echo far beyond Mexico: the company has extensive

operations across Latin America and has been expanding in Europe. If it is squeezed in Mexico, which in 2013 accounted for almost half of the company’s profits, expect America Móvil to aggressively pursue expansion opportunities in other areas of the world.”

Will Watts, Program Manager at Tarifica

The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues:  http://www.tarifica.com/TarificaAlert.aspx

Orange Slovakia Gains 100,000 Customers Over Several Days

Within 10 days of introducing unlimited on-net calls within a group of five users, Orange Slovakia gained 100,000 customers for the service, which became the most successful new product ever launched in the history of Slovak mobile market. To be eligible for the service, customers must have a minimum monthly expenditure of €20.00 (US $TK). If they do, they will automatically be given the opportunity to make four of their contacts available for unlimited free calls within the group. A group can be designated via SMS, via the mobile app Orange Go, on the operator’s website, through the customer-service hotline, or at Orange sales points. We think this idea is an excellent one, and a reminder that even in today’s jaded, saturated marketplace, and even with a basic, supposedly unexciting service such as voice calling, a major impact can be made if an operator tailors an offering very directly to the tastes and usage patterns of its subscribers. It may seem elementary that consumers spend most of their voice minutes talking to the same few people, but apparently, until now, no other operators in this market have taken this behavior seriously as the basis for an offering. Sometimes, a simple idea can be the best one. It should be noted that since this is an unlimited calling plan without an additional subscription fee, it will not directly generate revenue for Orange. However, it provides the operator with three benefits: First, it tends to maximize the use of network capacity. Second, it stands to significantly increase the customer base over time, if some of the contacts that customers wish to add are not currently Orange subscribers. Third, given its huge popularity, we expect that the service will boost customer retention, if the operator keeps it in place over the long term. While we do not know for sure whether other markets would show as much enthusiasm for group calling as Slovakia has, we think it is likely that many would. And we think it is certain that knowing one’s subscribers well is still the key to success in the mobile marketplace. The above item appeared in a recent issue of Tarifica's "The Story of The Week", a weekly report that analyzes two noteworthy developments in the telecoms industry from around the world. For past issues or to learn more about The Story of The Week :  http://www.tarifica.com/storyoftheweek.aspx