Sprint (NYSE:S), which competes with telecom giants like AT&T (NYSE:T) and Verizon (NYSE:VZ) in the mobile phone subscription plans business, has suffered subscriber losses over the past few years. The company is making efforts to improve its network and quality of customer service that could lead to a reversal in the subscriber trend and boost Sprint’s stock.
Below we discuss how Sprint is partnering with Ericsson to improve network quality, its efforts to improve customer service, and how these initiatives could positively impact Sprint’s stock in the near future.
Outsourcing to Ericsson is Improving Sprint’s Network
Last year, Sprint outsourced its network maintenance and infrastructure management to Ericsson, a provider of mobile and telecom equipment. Sprint maintains that outsourcing to Ericsson has improved its network performance in a short span of time, driven by Ericsson’s experience in managing about 80 mobile phone networks globally.
Sprint’s Efforts to Improve its Customer Service
Sprint’s declining customer service quality has been a prime reason for subscriber losses historically. The company is now channeling money saved from outsourcing network maintenance to Ericsson towards better customer service in an effort to reverse subscriber losses.
The company has been able to reduce customer service calls per subscriber by 12% in 2009 and by 39% in last two years. The company has closed down 30 call centers in last two years, which is likely to be a mixed result from a shrinking subscriber base and improving customer service.
30% Upside for Stock, if Sprint Curbs Losses
If Sprint is able to revert losses in its monthly subscribers over the next two years, we expect the company to rise back to its current mobile subscriber market share of about 16% by the end of Trefis forecast period.
We believe that if Sprint is able to regain customer confidence by improving its network, the growth in pre-paid subscribers and monthly CDMA subscribers will more than compensate for its shrinking base of push-to-talk (iDEN) subscribers. This should translate into an upside of about $1.3 per share or 30% for Sprint’s stock.
You can modify the forecast below to see how Sprint’s stock can be impacted if it’s able to gain rather than maintain its market share.
For additional analysis and forecasts, here is our complete model for Sprint’s stock
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