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Those of us who have been long on Sprint (S) for quite some time might feel disheartened by the apparent limbo the share price has been in for the last few months. Yet I believe this Thursday’s earnings report is likely to provide some strong signals of sustained progress in the turnaround effort the company has been embarked upon in the recent years.
At the end, it’s all about consumers. With Verizon (VZ) finally acquiring Apple's (AAPL) iPhone, it might seem that Sprint is in a difficult competitive position to attract new customers. However, I believe Sprint has several competitive strengths that define a far more robust competitive position than many might want to give it credit for. Those strengths are compelling plans that are well communicated to consumers; superior customer service; the increasing popularity of Google's (GOOG) Android; and, related to that, Sprint’s strong line-up of popular Android phones.
Compelling, Well-Communicated Plans
Sprint’s ”Simply Everything” plans continue to represent the best value out there. Generous minute allowances, plus unlimited web, text, e-mails and added-value services like GPS, Sprint TV and sports programs, are all included for a low monthly fee. In the case of a customer wanting to buy a 4G phone, there is a mere $10 surcharge.
AT&T (T), Verizon and T-Mobile charge individually for each of those services, making figuring out the amount of the final bill to foot a difficult exercise. Sprint has a consistent advertising effort supporting these plans, with a variety of clever messages that cut through the clutter. Both the sensible nature of the plans and the communications consistency is creating a consistent inflow of new contract-based customers for the company. Net customer growth is to be expected. AP reports that Sprint should "…report hitting another milestone in the fourth quarter: A net gain in subscribers on contract-based plans. Michael Nelson at Mizuho Securities (MFG) puts the number at 25,000.”
Superior Customer Service
Sprint’s significant effort behind customer service is paying off. On February 3, it issued the following press release:

The J.D. Power results released today show that while the other wireless carriers’ scores have either declined or shown very little improvement since the January 2010 survey, Sprint has made an impressive 10 point gain -- the only carrier to have achieved a double-digit increase in score in just one year.

Today’s J.D. Power study follows Sprint’s 11 consecutive quarters of improvement and comes on the heels of another recent third-party accolade. The January 2011 National Customer Service Survey from Vocalabs shows Sprint now leads all national wireless competitors across several phone-based customer service key metrics, including call satisfaction and first call resolution.

We’re not done and we’ll continue our aggressive fight to become the clear leader in customer wireless satisfaction overall.

  • Sprint is the most improved company in customer satisfaction, across all industries, over the last two years, according to results from the 2010 American Customer Satisfaction Index.

  • Sprint has seen 11 consecutive quarters of improved customer satisfaction and first call resolution.

  • Sprint winning the #1 spot for both overall satisfaction for wireless voice service providers and wireless data service providers in a Yankee Group and Mobile Enterprise magazine survey of large business decision makers. Sprint also ranked high in small and medium business customer satisfaction.

This consistent improvement in Customer Service ratings should support not only the acquisition of new customers, but most importantly it should cement the loyalty of current ones, resulting in a lower churn rate for the Company.
The Increasing Popularity of Android
On January 10, 2001, Infoweek (among many other publishers) published a note indicating that:

After several months of strong growth, the number of smartphones powered by Google's Android platform surpassed the Apple iPhone in the U.S. for the three-month period ending in November 2010, a market research firm says.

61.5 million Americans ages 13 and older owned a smartphone in the period, and 26% had an Android-based phone, ComScore reported Friday. Third-place Apple followed with a 25% share and Research In Motion (RIMM), maker of the BlackBerry, led the pack with a 33.5% share.

More than a competitive advantage, this pattern eliminates a competitive disadvantage for Sprint. While the iPhone is still very popular, and it will prove a sales-booster for Verizon, it is not the only game in town anymore. As more and more consumers get familiar with, get to respect and, in many cases, like Android better, a former barrier to switch to Sprint will subside. Not just that; the increasing penetration of Android will actually unlock and accentuate Sprint’s fourth strength.
Strong Line-Up of Android Phones
In a demonstration of significant strategic foresight, Sprint has built a stellar line of Android phones that has garnered excellent reviews from experts and consumers alike. Sprint pioneered 4G with the launch of the HTC Evo; it is featuring the crown jewel of Samsung’s (OTC:SSNLF) Galaxy series, the Epic, and quickly built upon the Evo’s success with the launch of its Evo Shift, which features a coveted slide-out keyboard.
These four strategic pillars should come to bear positively on the results to be announced. My expectation is that Sprint’s share price will be able to break out from the narrow trading range it has been mired in since the middle of last year.
Disclosure: I am long S.
Source: Sprint Earnings Preview: Competitive Strengths to Drive Results