Verizon initiated the year 2017 with the introduction of an unlimited data plan and has attracted a large number of users. This new data plan introduction was quite surprising as the CFO of Verizon had made a statement in the previous year and said that the unlimited data model does not work for them.
This is quite a contradiction from the statement of the CFO of Verizon. With help of this data plan now, Verizon has been successful with all the customers of Sprint in a very swift manner.
An investor conference of Deutsche Bank was held on Tuesday. In this conference, the CFO of Spring, Tarek Robbiati said that the push of Verizon towards the launch of unlimited data is largely affecting the number of users in Sprint. The customers of Sprint are declining as they are all preferring Verizon over Sprint. Tarek Robiatti also added that the competition and its intensity were far more than their expectations.
Sprint, in a very subtle way, suggested that the customers’ turnover rate has being going down steadily and it is because of the new Verizon strategy that is hitting the market. Not only are the number of customers declining, the pricing of the unlimited data model is disrupting and hindering the profits margin of Sprint. Because of the transformations and plummeting of these two factors, the stocks of Sprint have fallen in value by almost 5 percent.
To overcome this competition, Sprint has devised of a plan to reduce the prices of its services and offerings. After Verizon launched the unlimited data plan, which had a very aggressive pricing in the month of February, T-Mobile enhanced the quality of the plan it offered. This plan was included with unlimited data. AT&T also launched and introduced many options of data plans. To overcome the rivalry and competition by all these 3 companies, Sprint was only left with one option – to emerge from the losses and that was to reduce its prices.
For a longer term, if the company, Sprint wants to evolve as the emerging company it will likely be looking for a merger and collaboration with these companies so that it can grow and expand its business. In such a situation, many analysts reveal that T- Mobile might be a great choice if Sprint wants a merger. It will make one less company to compete with and also increase their hold over the spectrum availability.
Currently, since the margin of profits is dropping for Sprint, they have decided to reduce the amount of capital they will invest for the development of their networks.