Sprint Poised for Success: Growth Rate Likely to Increase

Jul.10.11 | About: Sprint Corporation (S)

Sprint (NYSE:S) just released its first dual-core smartphone and the first 3D phone in the world, the EVO 3D, and Apple (NASDAQ:AAPL) is expected to release a new iPhone in September that might be included in Sprint’s lineup. But beyond deciding between which phone to upgrade to, customers have another important consideration: data usage.

On Thursday, Verizon Communications (NYSE:VZ) joined AT&T Inc. (NYSE:T) by revamping its data usage plans to cut out unlimited data usage. Sprint remains the only major cell-phone carrier to offer unlimited data with no speed compromise.

Sprint has been fighting tooth and nail against AT&T’s proposed buy-out of T-Mobile—a merger that Sprint says will unfairly shift the tables in the cell phone carrier industry, reducing customer choice and raising costs. The reality is that Sprint will have an extremely hard time catching up to AT&T or Verizon if the merger takes place.

AT&T has been fighting back, but not attacking Sprint. AT&T’s subtle advertising campaign talks about how many more lives will be improved because of the better service with a more efficient network and greater 4G coverage. It has been talked about before, but AT&T needs Sprint to look strong so they can buy-out T-Mobile or there will be greater scrutiny on the take-over.

That was Sprint’s situation last month—but Verizon just put some wind in Sprint’s sails by changing its data usage plans. Here’s the breakdown of individual plans from all three carriers:


  • Unlimited Everything (data, text, call) $99.99 + $10.00 (premium data add-on is required)
  • 450 min with unlimited text and data $69.99 +$10.00 premium
  • 900 min with unlimited text and data $89.99 + $10.00 premium

The 450 min/month is Sprint’s most attractive data plan, as it is the cheapest one Sprint offers for smart phone users. (Disclosure: I am a Sprint customer and this is my data plan.)


  • 450 min and unlimited text $59.99, 900 min and unlimited text $79.99, unlimited $89.99

In addition, Android, iPhone, Blackberry, and Windows 7 users are required to pick one of the three following data plans:

  • $30 2GB
  • $50 5GB
  • $80 10GB


  • 450 minutes $39.99, 900 minutes $59.99, unlimited $69.99
  • 4 GB $45
  • 2 GB $25
  • Text is an additional $10-20

The comparable individual plan across all three carriers is 450 minutes—I see that as a typical amount of minutes desired by users. Here are the totals using 2 GB for AT&T and Verizon:

  • Sprint $79.99/month with unlimited text and data
  • Verizon $89.99 with unlimited text
  • AT&T $65.99 + $10-20 text plan

Sprint clearly has the cheaper option especially for heavy data users. Technology is becoming increasingly more mobile, and I think there will be increased strain on the networks as more people purchase data usage plans and use increasing amounts of data.

However, Sprint has less coverage in comparison to Verizon and AT&T, so it may not be a viable carrier depending on your location. But the monthly cost difference will still be hanging over the heads of many data fiends. In that regard, Sprint has locked in the contracts with 4G usage providers for future years and it has plenty of spectrum (ability to handle large amounts of data) for its customers. For more information on what Sprint is doing better, see Sprint: A Great Turnaround Story by 12 Value Stocks.

With the launch of the EVO 3D, a phone I have and love, and the possibility of the new iPhone in Sprint’s lineup, many Americans will be seriously reconsidering their current plans with AT&T and Verizon. Even if the merger with AT&T and T-Mobile succeeds, Sprint has great things to offer its customers. Now the question is how long they will continue to offer great pricing and value in the months/years to come.

Sprint is looking good long. It is rated a Strong Buy by Sabrient Systems, and in last 20 days, 3 analysts have revised their EPS estimates upward for 2011 and 2012. On a closer note, in last 30 days, 2 analysts have revised their EPS estimates upward for third and fourth quarters. Last quarter Sprint had pleasant earnings surprise of 31.80%.

S is expected grow by 48% this quarter, 42% in 2011, and 24.10% next year. The projected growth rate for the next 5 years is 4.47%. Assuming Sprint continues acquiring more contracts and new customers, the 5-year growth rate will likely increase.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.