Sprint Gets Lowest Marks in Consumer Reports Survey
If Sprint Corp. (NYSE: S) hopes to effectively compete with its largest rivals AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ), and its new controlling shareholder — SoftBank — ever plans to get its money back, consumers need to warm to Sprint’s service. So far, Sprint has been unable to turn that corner, and its problems actually have worsened. A new Consumer Reports study shows Sprint’s position among consumers actually has weakened.
According to the report on cell phone service ratings:
Sprint is now the lowest-Rated carrier in Consumer Reports’ latest annual cell-phone service Ratings, based on a survey of 58,399 subscribers by the Consumer Reports National Research Center. While it trailed only Verizon in overall customer satisfaction among the major carriers in last year’s ratings, Sprint received dismal marks this year for value, voice, text and 4G reliability.
AT&T and Verizon did well enough that they likely will hold almost all of their customers with ease. Even fourth place cellular provider T-Mobile US Inc. (NYSE: TMUS) had reasonably good grades, a particular insult to Sprint, which is much larger:
Verizon Wireless was once again the top major carrier, receiving high marks for data service and some aspects of customer support. AT&T and T-Mobile got mostly ho-hum marks, though AT&T was the lone carrier to receive the top rating for the reliability of its 4G service.
Sprint favors the use of nontraditional accounting standards like “adjusted EBITDA” to mask its deep financial problems. Based on standard accounting, it lost $398 million last quarter on revenue of $8.7 billion. For the same period, Sprint lost a net 313,000 customers.
Sprint’s new outside investor looks foolish so far, based on the deal completed in July:
Sprint Nextel Corporation and SoftBank Corp. today announced the completion of their merger whereby SoftBank has invested approximately $21.6 billion in Sprint, consisting of approximately $16.6 billion to be distributed to Sprint stockholders and an aggregate $5 billion of new capital ($1.9 billion at closing) to strengthen Sprint’s balance sheet.
At the rate Sprint’s results are deteriorating, Softbank will take a huge loss on its investment.
Sprint finished dead last in the Consumer Reports survey, which matched its financial results to its three major competitors.