* Sprint is losing customers to Verizon’s unlimited data plan
* Slashing prices has cut cash flow, meaning Sprint can’t invest in network
* With its stock down by 5%, a merger is not unlikely
Since Verizon launched an aggressively-priced unlimited data plan in February, the mobile giant has been slowly skimming customers away from its competitors.
Yesterday, Sprint CFO Tarek Robbiati told a Deutsche Bank investor conference that Sprint is losing customers to Verizon’s unlimited data plan. “The rise in competitive intensity has probably triggered a little bit more churn (customer turnover) than we thought,” Robbiati told investors.
T-Mobile and AT&T have both upgraded their unlimited plans to stay competitive with Verizon, but Sprint has no such option. As the mobile giant bleeds customer to Verizon, it has seen profits shrink. Less cash on hand means Sprint can’t invest in its network, which means that slashing prices is the only available strategy for keeping customers. Lower prices in turn bring lower profits, and the downward spiral continues. As of now, Sprint’s stock value has declined by 5%.
One strategy to save Sprint would be a merger with a competitor like T-Mobile. A Sprint/T-Mobile network would be highly competitive in terms of available spectrum. While better service is always great for customers, having fewer options is not. Sprint competes on price, and with fewer competitors, prices can be expected to rise for consumers.
So what does that mean for customers? You now have more choice than ever when it comes to unlimited data plans, so do your research, decide what’s important to you — price? reliability? speed? — and choose wisely.