A direct consequence of Sprint’s decision to switch to the prepaid business will eventually make the iPhone as one of the company’s no-contract units. However, it is Sprint’s MVNO Virgin Mobile which is reaping the benefits currently. June was when Apple had opened up a new medium for distribution of its coveted phones- the iPhone 4 and the iPhone 4S through Virgin Mobile, which is currently owned by Sprint. The shift to Virgin implied that customers had to bear the full cost of the model which sums up to $649.99 for the 16 GB model courtesy of the company’s no-contract policy.
The Chief Sales Officer at Virgin Mobile, Mr. Paget Alves asserted that the iPhone 4S is selling well at Virgin. However, he refrained from revealing the exact figures, as (according to him) it is too early to tell. He cited that the combination of the iPhone and the Virgin network as an intangible benefit and customers would be more than satisfied with it. Sprint is one of the few national carriers that are leaning towards the prepaid sector. However with lesser number of customers favouring contract plans, carriers are slowly beginning to switch to the prepaid sector.
Essentially, prepaid mobile companies gain advantage over the lower end (credit challenged) customers and also the ones who are fed up with contracts. In the second quarter Sprint added 141,000 customers into its prepaid business thus surpassing its contract business. Apart from Virgin the company also has another compatriot in its prepaid mobile business, called Boost Mobile. Although the revenue per user is relatively less, expenses in relation to subsidies, customer service and marketing have also reduced.
However Sprint’s growth seems to have come at the expense of regional carriers. Carriers like Leap Wireless (also known as Cricket wireless) posting abysmal quarter figures, losing a total of 289,000 customers. This loss was much worse than the company estimated. MetroPCS was also among the losers as the company witnessed several subscriber losses over the period. Even though the regional players see acquisition as their only exit, but Sprint as a buyer may not be able come up with an offer, as they are constrained by their finances, despite the fact that their technology is compatible with that of rural carriers.
T-mobile, despite their finances and foreign backing by Deutsche Telekom cannot acquire these companies thanks to the incompatibility in wireless technology. Verizon Wireless and AT&T are out of the equation as regulators wouldn’t permit any such deal going through. So at least for now, the smaller companies have to bear with the losses. Only time will tell whether Sprint can reach the levels it is aspiring to.
