Sprint cuts rates, CEO says more new plans to come
Sprint Corp (S.N) on Monday unveiled a new pricing plan that offers customers 20 gigabytes of data and up to 10 lines for $100, doubling its data offerings, the latest in a string of price cuts and promotions sweeping the wireless industry.
The move comes after Verizon slashed prices for its unlimited talk and text plan and T-Mobile expanded its family plan to 6 lines and could signal more price cuts ahead for the industry as a whole.
Sprint is going it alone after scuttling a months-long effort to pursue a merger with No. 4 U.S. cellular provider T-Mobile US Inc (TMUS.N).
“We will see a trickle down in pricing concessions across the industry. This is the start of a price war many anticipated would be coming,” said Angelo Zino, analyst at S&P Capital IQ.
New pricing plans that charge customers separately for the cost of their devices have somewhat offset price cuts this year, Zino said, but if the discounts continue, they could pose a long-term threat to the dividends.
Son, CEO of Sprint’s parent company, SoftBank Corp (9984.T), said earlier this year he wants to start a “massive price war” in the United States and warned that with Claure as CEO price competition will likely heat up.
But many question whether Sprint, with $27 billion in net debt according to the company’s latest filings is in a financial position to fuel a price war with its competitors.
“Do they have the balance sheet? Not really, but the good news is that they have a major investor in SoftBank, so they have the potential to get more aggressive” said Zino.
Source: Reuters
