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Sprint CEO: Best Return on Investment Comes From Retention

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NEW YORK (Dow Jones) Sprint Nextel is focused on retaining, not adding, customers, which represents the best return on investment, according to Chief Executive Dan Hesse.

The focus on retention is taking its toll on gross subscriber additions, or the number of new customers it is adding. Hesse is willing to tolerate the lower additions if they represent higher quality customers.

"We're working to improve the quality of the customer base," Hesse told analysts Wednesday during a conference call.

In addition, Hesse touted the improved rate of contract subscribers canceling their service, the best since Sprint's merger with Nextel. Still, he acknowledged the turnover rate was still twice that of the major carriers.

"We made progress in the quarter, but we're far from satisfied," he said. "We're still not in a position to deliver sustained earnings and revenue growth. I've been clear this will take time."

Hesse said the touch-screen device Instinct is faring well against the Apple iPhone, especially when factoring in Sprint's wider 3G network and the value of the "Simply Everything" $100 flat rate plan.

He noted the plan is attracting high-end customers and is profitable for Sprint.

New Chief Financial Officer Robert Brust said the company is taking on fewer "subprime" customers with poor credit. The company is also in compliance with its debt covenant for the "foreseeable future," he said. He is confident about the financial health of the company.

The company has worked to reduce the cost, including streamlining its distribution and closing stores. Brust noted the service cost rose in the period as a result of higher roaming and repair costs.

Sprint shares recently fell 9.9% to $7.70 on volume of 52.2 million compared with average daily volume of 34 million.

-By Roger Cheng, Dow Jones Newswires; 201-938-2020; roger.cheng@dowjones.com

(END) Dow Jones Newswires

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