Is Sprint Signaling a Shift in Focus Toward Profitability?

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Telecom companies have tried to one-up each other on promotions to drive growth in their industry for years. Some have even compared to this back and forth to a war. In recent memory, a big point of contention between these carriers has been unlimited data plans. However, one of the big four is backing off this contentious strategy, at least for a second.

In an unexpected move Sprint Corp. (NYSE: S) is dropping one of its more aggressive promotions, one that has been in place since 2014. Accordingly, Sprint will drop its deal of selling monthly subscriptions at 50% off those of rivals. It is expected though that the company will have new wireless pricing plans to replace this deal.

As we have said before, unlimited data plans have been the most recent battlefield for these telecom companies and part of the reason for Sprint backing off its 50% deal. Increased competition from AT&T Inc. (NYSE: T), Verizon Communications Inc. (NYSE: VZ) and T-Mobile US Inc. (NASDAQ: TMUS) has seemingly forced Sprint’s hand.

Each telecom giant has launched its own unlimited plan, which has hurt Sprint’s 50% plan. Originally, Sprint used the 50% offer to get customers in the door and then the firm would upsell customers on a data plan. However with unlimited data available at all carriers, there is not much left to upsell.

It is worth pointing out that by eliminating the 50% offer, Sprint could be shifting its focus. Instead of looking to aggressively add to its customer base, this could be more of a shift toward profitability. Sprint has not had a profitable year since 2006.

Shares of Sprint were last seen at $8.68 on Wednesday, with a consensus analyst price target of $7.28 and a 52-week trading range of $3.30 to $9.65.

AT&T shares were trading at $41.68. The 52-week range is $36.10 to $43.89, and a consensus price target is $43.05.

Verizon was trading at $49.40, with a consensus price target of $51.82 and a 52-week range of $46.01 to $56.95.

Shares of T-Mobile traded at $63.51. The consensus price target is $67.65. The 52-week trading range is $38.31 to $65.41.