Sprint 3rd Quarter 2014 Earnings

[modplan]

Same perception when all my close friends and family would say.  San Diego is Verizon city after Nextel was taken over by Sprint.  They rather pay more for "better" service even though Verizon is very congested with average 2-5Mbps.  But, when I was in Vegas, Sprint was working better than their service which changed the perception.  Until Sprint is speed king, it will be a rough ride to gain new customers.  People need to know they are the speed king and coverage follows.

 

From that Vegas trip, a couple of people already giving Sprint a shot because they were amazed Sprint was working better.  They felt there is better value, cheaper, faster and getting similar coverage.

 

I've had similar experiences in the last 6 months. My girlfriend has VZW through a family plan with her parents and siblings, yet when we went to their cabin in the mountains, I had "native coverage" full bars 3G from Carolina West Wireless, she was No Signal/1 bar 1xrtt depending on how she held her phone.

 

At NC State games where we are almost every weekend this time of year I now have glorious, fast, band 41 - while her Verizon LTE cannot load google.com. The rank in Raleigh for everyday usage is still Verizon, ATT, Sprint, Tmo, but the gap is narrowing, and at events where capacity is a problem and band 41 is available, I make it a mission to show everyone how much better Sprint is. But Sprint still needs to do a lot of work optimizing b26 here to take the crown, and getting b41 in a few more places like the concert venues and downtown.

[jamesinclair]

Does wholesale mean corporate phones?

 

If so, is that Sprint winning back the massive amount of accounts they lost when they closed Nextel?

 

As for Sprint perception, data service in Manhattan is still very poor (although better than a year ago). With so many corporate HQs there, I wonder how that affects business deals.

[rjw]

Does wholesale mean corporate phones?

 

If so, is that Sprint winning back the massive amount of accounts they lost when they closed Nextel?

 

As for Sprint perception, data service in Manhattan is still very poor (although better than a year ago). With so many corporate HQs there, I wonder how that affects business deals.

 

Wholesale =  MVNO providers I would assume. 

[modplan]

Does wholesale mean corporate phones?

 

If so, is that Sprint winning back the massive amount of accounts they lost when they closed Nextel?

 

As for Sprint perception, data service in Manhattan is still very poor (although better than a year ago). With so many corporate HQs there, I wonder how that affects business deals.

 

I think wholesale means MVNOs that use Sprint, but I could be wrong. If so, that isn't great financially, they pay very little to use the network. 

[bucdenny]

when were you there???

 

outside the strip maybe better.....but where the conventions and gatherings are and even at unlv.....it was spotty at best......this was Mid July

 

We had a suite at Planet Hollywood.  My M8 was sporting hotspot wi-fi for all my Verizon and AT&T hommies.  LOL.  It worked and some have moved from AT&T and Verizon to Sprint during the iPhone 6 release.  They want the speed! I didn't tell them to move but they saw what Sprint can do.

 

It is changing the perception "Verizon and AT&T is not king".  Sprint is speed king and when people see it they will believe it.  They will switch.

 

I will be in Vegas again this weekend.  Will let you know how it goes.

[newyork4me]

Wholesale =  MVNO providers I would assume. 

 

The conference call said the "near entirety" were connected devices (M2M). I.E. Alarm systems, telematics, connected appliances, etc.

[avb]

I was hoping they would announce the 3-5 cities that would've be showcased for a full b41 deployment.

[rjw]

I was hoping they would announce the 3-5 cities that would've be showcased for a full b41 deployment.

 

Yeah, it would be nice if they identified those markets. I am sure Robert will likely have some information sooner or later.

[lilotimz]

I was hoping they would announce the 3-5 cities that would've be showcased for a full b41 deployment.

 

 

Yeah, it would be nice if they identified those markets. I am sure Robert will likely have some information sooner or later.

 

We've already told you all the nine priority cities that Samsung itself is doing weeks ago: Indianapolis, Minneapolis, Detroit, Chicago, Denver, Seattle, Portland, San Francisco, and Cleveland.

 

Under promise, over deliver. 

[bucdenny]

Is it possible for Samsung to take over some of Nokia and ALU markets because of the delays on hardware?

[Conan Kudo]

The conference call said the "near entirety" were connected devices (M2M). I.E. Alarm systems, telematics, connected appliances, etc.

That's not good. From my experience in M2M (I've worked on M2M products before), the average ARPU is somewhere around $2-5 per month. Sprint absolutely cannot live off of that. The profit margin on those connections is pretty good (>90%), but the raw revenue is too low.

 

From what I know, revenue ratios on types of subscribers work out somewhat similar to this:

• Postpaid contracted phone+subsidy: 1.0x (baseline)
• Postpaid phone+EIP: 1.25x
• Postpaid tablet+EIP: 0.75x
• Postpaid/prepaid tablet+subsidy: 0.5x
• Prepaid phone: 0.5x
• MVNO retail: 0.3x
• MVNE M2M: 0.2x
• M2M direct: 0.1x

Sprint's subscriber mix has changed rapidly toward those that generate substantially lower revenue. This is why Wall Street has punished the stock. This is going to make the cash burn problem even worse, too.

[bbspot]

We had a suite at Planet Hollywood. My M8 was sporting hotspot wi-fi for all my Verizon and AT&T hommies. LOL. It worked and some have moved from AT&T and Verizon to Sprint during the iPhone 6 release. They want the speed! I didn't tell them to move but they saw what Sprint can do.

 

It is changing the perception "Verizon and AT&T is not king". Sprint is speed king and when people see it they will believe it. They will switch.

 

I will be in Vegas again this weekend. Will let you know how it goes.

B41?

[lilotimz]

Is it possible for Samsung to take over some of Nokia and ALU markets because of the delays on hardware?

 

No. 

 

All three vendors have geographical contracts along with non compete clauses. Samsung and the regions OEM are removing Clear Samsung equipment by the end of next year in non Samsung NV OEM markets to comply with the non compete clauses. 

[modplan]

That's not good. From my experience in M2M (I've worked on M2M products before), the average ARPU is somewhere around $2-5 per month. Sprint absolutely cannot live off of that. The profit margin on those connections is pretty good (>90%), but the raw revenue is too low.

 

From what I know, revenue ratios on types of subscribers work out somewhat similar to this:

• Postpaid contracted phone+subsidy: 1.0x (baseline)
• Postpaid phone+EIP: 1.25x
• Postpaid tablet+EIP: 0.75x
• Postpaid/prepaid tablet+subsidy: 0.5x
• Prepaid phone: 0.5x
• MVNO retail: 0.3x
• MVNE M2M: 0.2x
• M2M direct: 0.1x

Sprint's subscriber mix has changed rapidly toward those that generate substantially lower revenue. This is why Wall Street has punished the stock. This is going to make the cash burn problem even worse, too.

 

$2-$5 a MONTH!? Then WHY THE HELL am I paying ADT (they use AT&T I think, but still) $50/mo for a security system over cell when the land line version is $23!!! lol

[JimBob]

Very disappointing numbers.  Sprint shareholders will once again have to be patient for yet another quarter.

[Nickel]

Maybe SoftBank has to send people to China and crack whips to get equipment moving. I suspect that if the US was band 7/38 that Sprint could get FD-LTE equipment moving faster.

Did you get a little confused here? Band 38 is TDD.

[Conan Kudo]

$2-$5 a MONTH!? Then WHY THE HELL am I paying ADT (they use AT&T I think, but still) $50/mo for a security system over cell when the land line version is $23!!! lol

In M2M, downstream companies massively inflate the MRC (monthly recurring cost) to their customers so that they make a substantial profit. This allows them to take a small loss on hardware for the initial term, if necessary. One firm I know about charges its customers about $15/mo for the "airtime", but its own cost is less than a dollar per month. Depending on the company and how the hardware is sold, these numbers may differ quite a bit.

 

There's also a second reason for the inflation. M2M monthly rates generally cover an extraordinarily small amount of data. For example, a carrier like Sprint would offer $1/mo for 500KB of data, with maybe $0.10 to $0.50 per extra 500KB in overages. Downstream companies "buffer" this cost by charging a larger sum per month (setting it up as a flat rate to their customers) and set aside a bunch of it for "unexpected" airtime charges. Firmware updates are usually the culprit here, as they tend to trigger $3-5 charges in a month.

[darn18]

Maybe SoftBank has to send people to China and crack whips to get equipment moving. I suspect that if the US was band 7/38 that Sprint could get FD-LTE equipment moving faster.

 

On a side note, the Alcatel-Lucent people need to get off FierceWireless and spend more time accelerating deployment.

i thought Sprint phones worked on band 7 and Band 38

[Fraydog]

i thought Sprint phones worked on band 7 and Band 38

The iPhone 6/6+ does.

[darn18]

The iPhone 6/6+ does.

That's the only one... What about the G2&3 and Galaxy S 4&5?

[Fraydog]

That's the only one... What about the G2&3 and Galaxy S 4&5?

I think they only use 41. This is already a water under the bridge point. Sprint has to make best of band 41.

[newyork4me]

In M2M, downstream companies massively inflate the MRC (monthly recurring cost) to their customers so that they make a substantial profit. This allows them to take a small loss on hardware for the initial term, if necessary. One firm I know about charges its customers about $15/mo for the "airtime", but its own cost is less than a dollar per month. Depending on the company and how the hardware is sold, these numbers may differ quite a bit.

 

Exactly. The M2M contract I'm familiar with costs about $1/mo per connected device.

 

And, to the original questioner, ADT charges it because they can! They have people willing to pay it, so why not profit from it?

[darn18]

What's the difference between band 7, 38 and 41? Don't they all use the same 2.5/ 2.6 GHz band?

[lilotimz]

What's the difference between band 7, 38 and 41? Don't they all use the same 2.5/ 2.6 GHz band?

 

Band 7 is FDD-LTE

 

Band 38 TDD-LTE is a subset of Band 41 TDD-LTE that operates between 2570-2620mhz. 

 

A  Band 38 TDD-LTE device cannot access Band 41 if B41 carriers are in spectrum outside the range of Band 38 but the vice versa can be done as Band 41 encompasses everything in the 2.5-2.6 ghz range. 

 

Example: most popular Band 41 EARFCN is 40978 which is center frequency 2628.8 mhz with the next most popular ones being in the 2500-2540mhz range which are all outside of Band 38s supported range. 

[darn18]

Band 7 is FDD-LTE

 

Band 38 TDD-LTE is a subset of Band 41 TDD-LTE that operates between 2570-2620mhz.

 

A Band 38 TDD-LTE device cannot access Band 41 if B41 carriers are in spectrum outside the range of Band 38 but the vice versa can be done as Band 41 encompasses everything in the 2.5-2.6 ghz range.

 

Example: most popular Band 41 EARFCN is 40978 which is center frequency 2628.8 mhz with the next most popular ones being in the 2500-2540mhz range which are all outside of Band 38s supported range.

Gotcha band 41 covers all. So my band 41 phone will work in a region that has only band 38.