Sprint CEO Marcelo Claure pitched the advent of 5G as an inflection point which will allow the operator to charge more for service on a stronger network.
In an update on Sprint’s plan to launch nationwide mobile 5G in 2019, Claure noted on an earnings call today (2 February) the operator already locked in agreements with network equipment vendors for massive MIMO and 5G deployments. He also revealed Qualcomm will release a 2.5GHz-enabled 5G chip in late 2018 and added Sprint had been working with a “leading Korean manufacturer” to ensure consumer devices are ready for launch in the first half of 2019.
The CEO said the wireless market remains competitive, but argued Sprint’s 2.5GHz spectrum holdings position it to lead on 5G. With a solid 5G network, Claure said the operator will be able to charge more for its services.
“It is going to be very difficult for our competitors to increase the price of unlimited, but we’re going to have a lot of room to increase our price of unlimited to get to similar prices as Verizon and AT&T in the future. You get that by having an amazing network, you get that by being the first to 5G.”
Sprint CFO Michel Combes said the operator will boost its capex in the coming quarter to a minimum of $1 billion as it adds more cell sites and begins massive MIMO deployments in the run up to 5G.
As part of its broader network enhancement plan, Claure shared Sprint will increase its total number of macro sites by nearly 20 per cent and deploy 40,000 outdoor small cell solutions, including at least 15,000 strand mounted small cells through its cable partnerships. He added work to upgrade nearly all of Sprint’s sites with triband capabilities is expected to be completed this year.
CTO John Saw also noted Sprint is “working aggressively” with dark fibre providers like Zayo to upgrade its backhaul network ahead of massive MIMO and 5G launches.
On the financial side of the house, tax reform propelled Sprint’s net income to new heights in its fiscal Q3 (the three months ended 31 December).
A $7.1 billion positive tax impact pushed Sprint’s net income to $7.2 billion despite a $310 million year-on-year dip in revenue to $8.2 billion. Sprint partly attributed the latter slide to a decrease in wireless service revenue, which dropped $327 million year-on-year to $5.6 billion.
Post paid subscriber additions also tumbled from 368,000 in the year ago period, but remained firmly in the black at 184,000. Prepaid subscriber figures came in above board with a total of 63,000 net additions.
Claure acknowledged post paid phone churn of 1.71 per cent was higher than at its peers, but noted the company “made a decision” to manage the business with higher churn. He said churn rates are expected to peak in fiscal 2018 before trending downward in fiscal 2019 as Sprint launches its mobile 5G network.