Sprint Corporation (NYSE:S) Downplays Service Disruption During Upgrade

Sprint Corporation (NYSE:S) has dismissed reports claiming that its customers could face severe service disruptions during the scheduled network upgrade. The U.S. No. 4 carrier is in the process of improving its network quality through a mix of strategies that include deployment of small cells.

Sprint Corporation (NYSE:S) is dreaming of leading or at least becoming second in terms of network quality in at least 80% of the U.S. markets. There is no doubt that Sprint is also struggling to reclaim its position as the U.S. No. 3 carrier, a spot that it lost to the disruptive T-Mobile. Sprint added 501,000 postpaid subscribers in 4Q2015, significantly up from 30,000 in a similar quarter a year earlier.

Service disruption

Sprint’s CEO, Marcelo Claure, maintains that the network upgrade they are planning will not cause service disruptions to their subscribers. Instead, he claims that Sprint subscribers will see improvement in service quality during the upgrade process. The reason Claure insists that reports about service disruptions are inaccurate is that they tend to create the impression that the upgrade will involve rip-and-replace process, which has caused service problems in the past. However, it turns out that Sprint is planning what the management calls “progressive build”, which should boost service quality in an ongoing manner.

Mixed approach

Sprint Corporation (NYSE:S)’s network improvement program will involve multipronged in nature. Among other things, the company intends to increase small cell deployment, especially in strategic locations to enhance service quality in high demand locations.

Cost-reduction

It has also emerged that Sprint planning to adjust its backhaul agreements with Verizon Communications Inc. (NASDAQ:VZ) and AT&T Inc. (NYSE:T), mainly to help it trim its costs. Sprint is in the process of cut its cost structure by about $2 to $2.5 billion. The cost-reduction initiative involves staff layoffs. The company is trimming at least 2,500 positions.

Earnings

Sprint Corporation (NYSE:S)’s assurance of quality service continuity during the upgrade comes after the company posted better than expected earnings for 4Q2015. EPS loss of $0.21 was narrower than the average Street estimate of $0.25. The bottom-line improvement mainly came courtesy of cost-cutting measures. However, operating revenue of $8.11 billion fell 9.7% YoY and also missed the consensus estimate of $8.23 billion.

Sprint Corporation (NYSE:S) added 501,000 postpaid customers in 4Q, sharply above 30,000 added in the same quarter a year earlier.

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