If you compare prices of a phone plan today versus two years ago, or even a year ago, you’ll see a huge difference. Thanks to the two smaller national carriers, Sprint and T-Mobile, plans have dropped in price pretty dramatically. And Sprint’s CFO, speaking at Bank of America Merrill Lynch 2015 Leveraged Finance Conference, says that there are still room for more price cuts in the US. Sprint’s CFO, Tarek Robbiati, compared the US industry to Hong Kong, stating that you can get “very, very decent 4G data packages on 4G networks for less than $5”. Which is entirely true, additionally, speeds in Hong Kong are often times much faster than what we see here in the US. Robbiati continued stating, “this is real priced-based competition, we haven’t felt it here yet.”
Robbiati was asked about how the company’s new half-price offer has worked out for them yet. While he didn’t say how successful or unsuccessful the promotion has been, he did say “It’s just a promotion and not necessarily a strategy.”Robbiati also stated that this promotion was solely targeting their competitors in bring customers back to Sprint. Stating that in 2014, the company lost 1.5 million customers. And they want them back. Sprint is also looking to shave around $2 billion off of their costs by the end of fiscal 2016. Robbiati stated that this is “very achievable”, with Sprint’s operating expenses currently around $26 billion annually.
In terms of cutting costs for the company, Robbiati stated that there isn’t just one area that they are looking to cut costs. And instead are looking across the board. The CFO said that these costs include IT, Legal, corporate, human resources, general and administrative and much more. They are looking to cut costs where they can and stop the bleeding, which will start a turn around, which Sprint desperately needs.
So in addition to Sprint cutting costs, the company also thinks it can continue to cut the price of plans that they offer, and in turn force their competitors to do the same. Which is only going to increase competition and make it a better industry for the customer.