Sprint Nextel (S) has reportedly expanded the coverage of its Boost Mobile prepaid subsidiary across all of its wireless network platforms. Boost Mobile will offer its popular $50 monthly unlimited calling plan to all new and existing prepaid subscribers on the carrier’s own branded CDMA wireless network starting Jan 13, 2010. Previously, the company had restricted this service to customers who are on Nextel’s iDEN wireless network.
Moreover, Sprint has announced that it will sell three new handsets including Research In Motion’s (RIMM) BlackBerry Curve 8830, the first smartphone for the Boost prepaid division. The company will sell the Blackberry smartphone for $250 with a $60 monthly unlimited plan. Boost Mobile currently offers prepaid services to 5.7 million customers in the US.
Leveraging the iDEN network, Boost Mobile launched the $50 per month unlimited plan (voice, text, data) nationwide in early 2009 which fueled the price war in the unlimited prepaid mobile space. This prepaid rate plan is about 50% lower than the comparable unlimited rate plans offered by Sprint’s major rivals Verizon (VZ) and AT&T (T).
Boost Mobile’s $50 plan competes head-to-head with low-cost service plans of the other leading players in the unlimited prepaid market such as MetroPCS (PCS), Leap Wireless (LEAP), Deutsche Telekom’s (DT) US subsidiary T-mobile USA and America Movil’s (AMX) Tracfone. The prepaid wireless market is expanding at a healthy pace as cash-strapped customers look for less expensive plans in a weak economy.
Sprint remains significantly challenged by the precipitous decline in subscriber base and revenues. Conversely, its larger peers Verizon and AT&T continue to expand their respective customer bases at a brisk rate. Sprint is losing customers to its bigger rivals due to intense pricing pressure and technical problems associated with integrating its incompatible CDMA and iDEN networks. The company’s core postpaid business is gradually shrinking as it has lost roughly 3 million customers in the first nine months of 2009.
In contrast, Sprint continues to register healthy growth in its prepaid subscriber base. The $50 unlimited plan continues to gain significant traction, facilitating prepaid subscriber retention and ARPU (average revenue per user) growth. The service has been the primary catalyst for Sprint’s prepaid business adding 2.1 million customers during the first nine months of 2009.
Expansion of the Boost Mobile service coverage will help Sprint to improve customer retention on its CDMA network, which is more compatible with popular data services than iDEN. Moreover, the new plan enables Sprint to establish parity between the unlimited price plans across its two wireless (CDMA and iDEN) networks.
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