New Sprint Strategy Targets Prepay Market

Sprint is betting on prepay services in a new attempt to stem the tide of defecting customers.

The operator plans to add a fourth prepay offering, under a new brand that it hasn't unveiled. The service will be aimed at the budget conscious and will launch this month in 16 markets.

It will be targeted at people who spend less than US$30 per month on mobile service. Sprint called these people "no-frills" customers.

The newest Sprint prepaid option joins several others that the operator already offers, including through the Virgin Mobile brand, which will introduce on May 12 three plans that include unlimited messaging, e-mail and data. Those plans start at $25 a month, which includes 300 voice minutes. For an added $10 per month on any of the plans, users can get BlackBerry data services.

Sprint also offers prepay services under the Boost brand and has a prepay wireless Internet service.

By focusing on the prepaid market, Sprint may be hoping to take advantage of what appears to be a trend. In the fourth quarter of 2009, 65 percent of people who signed up for wireless service in retail stores were prepaid users, according to IDC.

The operator is not alone in paying more attention to the prepay segment. AT&T said that it has been making some changes to its prepaid offerings and to its offerings to resellers, who typically offer prepaid services.

"As a result, what you saw this quarter is continued growth in the reseller category but also small but positive growth in prepaid," said AT&T Chief Financial Officer Rick Lindner, speaking during the company's first-quarter earnings call in late April. "When you look at the prepaid trend over the past several quarters, churn has come down dramatically and the net add trend there has improved."

Sprint has struggled over the past few years to add customers rather than lose them each quarter, although the rate at which it is losing customers has slowed.

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