Telecom & Wireless

Sprint Won't Be Helped by RadioShack Stores

The addition of about 1,700 RadioShack stores to sharply expand its retail footprint will not help Sprint Corp. (NYSE: S). It remains sandwiched between larger rivals Verizon Communications Inc. (NYSE: VZ) and AT&T Inc. (NYSE: T) and aggressive upstart T-Mobile US Inc. (NASDAQ: TMUS). And its image with many consumers continues to be tainted.

As a matter of fact, the Sprint brand has fared so poorly that the company took a $1.9 billion write-down on the trade mark last quarter. During the same period, revenue fell 2% to $9 billion. Sprint lost $2.4 billion.

Management did not offer much in terms of encouragement about the future:

“We are pleased with the growth in sales in the quarter and the improving quality of our customer base as we begin our turnaround plan,” said Sprint CEO Marcelo Claure. “However, we acknowledge there is a long way to go to reach our goals, including lowering our postpaid churn rates to competitive levels. Our network performance continues to improve, and we are now focused on a strategy that will unlock the true potential of our spectrum assets. I am confident that we have the right plan in place to be successful.”

ALSO READ: The Bullish and Bearish Case for Verizon in 2015

T-Mobile in particular wants to rob as many Sprint customers as possible and offers aggressive pricing to do so. That has driven poor financial performance for T-Mobile and a risk its parent Deutsche Telekom might abandon it. However, Sprint may fall behind T-Mobile in terms of total customers. While consumers may not care, it is one of T-Mobile’s primary goals.

Sprint also has to deal with the fact that customers think poorly of it and relatively well of T-Mobile. In a recent Consumer Reports study:

This might be a result of T-Mobile’s aggressive “Uncarrier” strategy, which effectively decouples the purchase of your phone with the payment of your plan. Ironically, T-Mobile’s good score for value makes it a standout among the big four carriers; the other three rate very poor. The biggest black eye of our survey is reserved for Sprint, which ranks dead last with a very poor score for value, a poor score on data service, and middling results for voice and text.

Studies from American Customer Satisfaction Index (ACSI) and J.D. Power posted similar conclusions.

Based on Sprint’s serious problems, more retail locations are not the key to bettering its performance.

ALSO READ: T-Mobile’s Ugly Future

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