Sprint had a solid quarter adding 256k postpaid subs, of which, 184k were phone adds.  On the prepaid side, net adds were only 63k and below both expectations and YoY/QoQ comparisons.  Churn still haunts Sprint and was 1.8% during the quarter.  Postpaid phone churn continues to see slight improvements but remains high at 1.71% postpaid phone churn — roughly double Verizon.

Sprint saw the highest percentage of upgraders during the quarter, 9.2%.  Sprint and Boost brands activated 7.3m devices, up from 7.1m last year.  Sprint’s focus on lowest cost of ownership of Apple and Samsung devices, iPhone for life and Galaxy for life programs, helped drive a strong quarter of flagship sales.  This drove postpaid improvements. 

Source: Sprint

Source: Sprint

Other wireless highlights:

• Sprint sold over 1m iPhone X in November and December, making the device the carrier’s top seller during the quarter.  The iPhone 8 and iPhone 8+ were nearly identical in sales and took the #2 and #3 positions.  The Galaxy Note 8 and J3 Emerge were the top sellers for Samsung. 
• The X power and Tribute HD were the top sellers for LG.  The X power is a $270, MediaTek powered device known for its monster 4100mAh battery.  The Tribute HD was a key seller within Boost, Amazon, and national retail.
• Prepaid, especially Boost, remains strong but growth has slowed.  Competition from MetroPCS, Cricket and even Verizon has increased. 
  • The key to winning a top seller in Boost, is being a ‘switch’ device.  This is, a device which is given for free when switching from another carrier.  During the quarter, most often used switch devices were LG Stylo 3, Samsung Galaxy J3 Emerge, and Moto E4.  The ZTE Max XL—the 6” device with a 3990mAh battery costing $100 retail was another key seller despite rarely used as a switch device.    
  • Prepaid churn remains high at 4.63%.
  • Boost brand remains the workhorse, Sprint prepaid brand is suffering and low ARPU.
  • Driven by Boost, ARPU has increased to $37.46.
• Sprint is now 54.6m customers
  • After terrible 2015, 2016 campaigns where Sprint was losing 10% of its postpaid base, postpaid has stabilized.  Postpaid phone base is now 26.6m, 5.3m connected devices (mainly tablets, smartwatches).
  • Sprint exited the quarter with 9m prepaid subs.  But, with the focus turning towards postpaid, prepaid growth has been decelerating.
  • 13.7m wholesale subs and this number should decline through 2018 due to less government subsidies of the Lifeline plan.  Sprint is increasing its digital presence and storefronts, which means it will probably wholesale less due to its lower ARPU. 
• Tablet sales continue to decline and churn off the network.  Sprint is not chasing these subs as in previous quarters.  It has offset some of these losses by selling about 250k Apple iWatches during the quarter.
• 79% of the base is now on an unsubsidized plan.  The company expects the remaining 10% of the postpaid phone base to transition over the next 18 months.  10% will remain on subsidized plans.  These are business accounts and some legacy special cases.
• Sprint is the sole carrier focused on leasing.  Other carriers have dropped or de-emphasized.  Within Sprint, 45% of the postpaid base has an active leasing agreement, up from 38% last year.  This has helped only Apple and Samsung.  Other OEMs, with less value retention in used devices, are shut out from leasing programs.
  • The churn on customers who upgrade each year onto a new device is low—well under 1% or nearly half the rate of overall.  Customers who hold onto their devices 18-24 months churn more similarly to overall base.  However, Sprint takes back these flagships, refurbs them, and puts them back on their network via prepaid and postpaid sales.
• Services: Sprint has not invested the billions of dollars in media that Verizon and AT&T have invested in DirecTV, Yahoo, AOL, and others (Time Warner hinging).  However, Sprint is adding Hulu to all unlimited plans—a defensive move to help with the high churn. 
• Store presence: Sprint believes it can improve margins by wholesaling less.  To do so, the company has been adding storefronts—500 Sprint and 500 Boost stores this year.  There is also a big push on customer service—a thorn in Sprint’s side for many years.  The company is adding online service and incorporating better digital capabilities.  The company is also attempting to simplify insurance programs and trade-in programs. 
• Marketing initiatives were not as aggressive this quarter relative to 4Q16.  There remained a lot of activity, however most required an activation of a new line to receive the BOGO or discount.  This is the primary reason that churn ebbed up slightly during the quarter. 
  • Postpaid November – December: Sprint offered a $350 port-in offer or a $300 trade-in offer if a new line was lit up.  Sprint also offered postpaid discounts of 50% off Galaxy devices.  Free Hulu offer is also trickled into stores. 
  • Postpaid October: BOGO on iPhone 7 and 50% off promos on LG V30+ and Samsung Galaxy GS8. 
  • Prepaid: Boost continues to remain competitive outdueling MetroPCS with its ‘5 (lines) for $100’ offer which it has run through the end of January.  In February, prior to tax season blitz, the offer was adjusted to ‘4 lines for $100’. 
    • Apple was not a significant volume driver in past quarters.  This has increased in Q4 with promos of used iPhone 6 sales.  Another driver was three free months of service for subs who port / purchase an iPhone SE.
    • Boost BestBuy sales have been driven by Moto E4 and LG Tribute HD sales.  Other key devices include LG Stylo 3 and the Samsung galaxy J7 Perx.
  • Exclusives within Sprint have been mixed.  The HTC Bolt received a lot of promotional activity early, but never panned out.  It has been relegated to ‘online only’ and even online has had spotty availability.  Essential phone picked up volumes of over 100k when the device was drastically reduced in price to $7/month.  However, when it returns to normal pricing ($29/month or $699), it fades.
• Network: Sprint has laid out their ‘Next-Gen Network Strategies’ for 2018-19.  These include:  
  • Adding 20% more macro sites.
  • Convert all cell sites to tri-band to support Sprint’s three spectrum bands: 800, 1.9, and 2.5.
  • About half of the company’s micro sites have 2.5 today.  The rest of the sites should be upgraded by YE2018.
  • Sprint will deploy more than 40k outdoor small cell solutions.
  • Altice and Cox agreements will secure some fiber backhaul in dense/urban areas.
  • The company will deploy more than 1m ‘Sprint Magic Boxes’.  These are plug and play small cells that business’ and consumers can place in their domicile.  It improves indoor coverage and increases download speeds up to 200%.  The company has deployed 80k thus far in ’18 in 200 cities. 
  • Sprint is suspect of mmWave hurdles still needed to overcome.  The company will not be dependent on mmWave.
    • The company suspects to have 5G services and devices 1H19.  Sprint CEO: “Working with Qualcomm, network providers, and device OEMs in that order to launch (5G) in the first half of 2019.”

Sprint’s “Magic Box” shown below (hardware from Airspan) is a small cell placed inside of a business or residence.  The box will connect with a Sprint 2.5GHz tower and extend an LTE signal up to 30,000 square feet indoor space (good for SMB’s, high density buildings) and up to 100 meters outdoors.