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How Claure can fix Sprint as it battles T-Mobile

New CEO must lower prices for Sprint products and services, offer guarantees and be the company's frontman, analysts say

What can incoming Sprint CEO Marcelo Claure do to reverse the carrier's declining subscriber base?

Sprint's new CEO Marcelo Claure
Analysts offer new Sprint CEO Marcelo Claure advice on how to turn the company around. (Photo: Sprint)

Sprint today is perilously close to dropping into fourth place in subscriber numbers behind T-Mobile after years in third position. That dramatic possibility turns T-Mobile into Sprint's prime competitor.

Claure, 43, starts his Sprint CEO tenure on Monday. He replaces Dan Hesse.

Claure joined the Sprint board of directors in January. Years earier, he founded the spectacularly successful Brightstar, now the world's largest mobile device distributor. Brightstar will be fully acquired by Sprint's Japanese parent SoftBank, once Claure becomes CEO.

In his new post, Claure faces multiple challenges.

Chief among those will be finding ways to quickly add more subscribers and retain them, which would likely lead to revenue growth again after five years of losses.

Sprint lost 220,000 subscribers, both pre-paid and post-paid, in the last quarter, and now accounts for 16% of all U.S. wireless subscribers, just barely ahead of T-Mobile's 15% share, according to Chetam Sharma Consulting. T-Mobile has been adding subscribers.

AT&T and Verizon Wireless each are tied atop the list with each accounting for 34% of U.S. wireless subscribers.

Three analysts shared with Computerworld their thoughts on what Claure must do -- right away -- to avoid falling to fourth place in that critical subscriber metric.

The suggestions, described below, include the need to quickly drop Sprint's prices for services, as well as revamp its overall pricing structure. Other suggestions include offering guarantees of wireless connections backed by refunds if service fails. Another suggestion: beef up Sprint's efforts to attract small- and mid-sized business customers.

All three analysts suggested Claure needs to be more out-front -- even controversial -- than his down-to-earth predecessor Dan Hesse. That's especially important given how outspoken and irreverent T-Mobile CEO John Legere has been in successfully espousing his company's new pricing and no contract schemes.

If T-Mobile is really about to become Sprint's main competitor, then Claure needs to acknowledge it, analysts added.

Multiple problems are cited for Sprint's downward slide in recent quarters, analysts said, noting that the problems have come amid reports that Sprint and Softbank were looking to buy T-Mobile. Now that that merger quest is apparently on near-permanent hold, Sprint must focus on its own future.

"Sprint needs to stop the bleeding. Growth comes after that," said Carrie MacGillivray, an analyst at IDC.

Price cuts -- what's low enough?

While analysts agreed that Sprint must lower prices, they have to figure out how much and in what manner.

In a sense, the pricing issue is Claure's toughest task, because low prices alone won't keep customers in the Sprint fold -- network reliability and customer service remain equally important. Still, T-Mobile has shown that low prices and no-contract plans, if done right, can attract new customers.

Sprint's Framily plan, which has been advertised heavily in a series of recent wacky TV ads, doesn't work out to be less costly than T-Mobile, based on different comparisons, analysts said.

What's more, Framily may be too complex for consumers to understand, MacGillivray suggested.

"Forget about Framily--it's a complicated concept," MacGillivray said. "The market has gone back to the meat and potatoes of mobile services." Sprint must focus on plans that are "easy, affordable and marketed provocatively."

Instead of Framily, Sprint needs to at least match T-Mobile prices and certainly come in at $5 to $10 less per month on average for both voice and data than both AT&T and Verizon, said Roger Entner, an analyst at Recon Analytics.

"Sprint has to become the value leader in the U.S. That's the sweet spot," Entner said in an interview.

Bill Menezes, an analyst at Gartner, agreed. "Price-cutting will get attention and grab customers."

Menezes suggested a range of innovative offers, including changing the structure of how voice and data services are charged.

One possibility: pay-as-you-go pricing for voice and data, similar to how some carriers market pre-paid pricing, he said. That approach means a customer's data allotment or voice minutes never expire at the end of the month.

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