Will Sprint Corp (NYSE: S) Remain A Price Leader Despite Expiring Promos?
Sprint Corp (NYSE: S) is the fourth largest mobile carrier in the USA and has cemented its position in the market as a price leader by offering different promotional prices to new customers. The company has utilized this strategy since 2014 when Marcelo Claure took over as CEO, which implies that the strategy is unlikely to change given that Mr. Claure is still at the company’s helm.
Sprint Corp is the price leader in the US wireless market.
There are concerns that the company might not renew expiring promos.
Most US carriers are engaged in a race to the bottom through aggressive pricing.
Some of the recurring promos that are synonymous with Sprint’s position as a price leader in the telecom industry include the waiver of per-line fees on most plans. However, concerns have emerged given the recent expiry of some of the company’s current promos, which were launched in 2015; but it is highly unlikely that the company will allow the promos to expire without initiating new promos.
As the competition intensifies between Sprint and the other carriers including Verizon Communications Inc. (NYSE: VZ), AT&T Inc. (NYSE: T) and T-Mobile Us Inc (NASDAQ: TMUS), the company is likely to continue offering promos in order to attract new customers. The company typically does not include existing customers in its new promos, which could be a major contributor to the carrier’s high customer churn rate.
After the carrier’s plans to merge with T-Mobile fell through, its parent company Japan’s Softbank is investing heavily in upgrading the carrier’s network by deploying numerous small cells and antennas across the country. Sprint was banking on the acquisition of T-Mobile as a way of cushioning it against the massive expenses of installing new infrastructure in order to boost the speed and coverage of its network.
The company faces stiff competition in the US where dominant players such as Verizon and AT&T have the lion’s share of the wireless market. As a price leader, Sprint is involved in a race to the bottom as carriers seek to upend each other by slashing prices, which has negatively affected the profitability of most carriers.
Finally, it is not enough to know that a stock is likely to head higher, or lower this year. As an investor or trader, it is important to time your entry and exit points accurately in order to minimize risk and maximize your profit potential.
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