With revenues rising and a stock price nearly double what it was at the beginning of the year, there are reasons to be bullish on Sprint's future.
A year ago when it appeared that an AT&T-T-Mobile merger was bound to get regulatory approval, the outlook was dim for Sprint in an industry seemingly ready to leave it behind. Verizon Wireless would certainly follow with a significant acquisition of its own, right?
All that talk became moot when the proposed AT&T-T-Mo venture went to that big M&A boneyard in the sky. About the same time, Sprint forged a deal with Apple to become the third U.S. carrier to offer the iPhone. Those events started the turnaround for the Overland Park, Kan.-based wireless company, which is in the middle of a steady comeback.
In order for Sprint and the rest of the industry to get stronger, CEO Dan Hesse – an outspoken critic of the AT&T-T-Mobile merger – told reporters this week that consolidation among some of the smaller players is bound to happen, but "the gap in size between [Verizon and AT&T] and [the third largest carrier, Sprint] is so enormous ... consolidation is healthy for the industry as long as it's not AT&T and Verizon getting larger," as paraphrased by USA Today.
When discussing the company's decision to begin selling the iPhone last October – which is costing Sprint a minimum of $15.5 billion over four years – Hesse said, "We saw no reason to bet against Apple ... we thought the benefits greatly outweighed the risks." And while the carrier's net loss grew last quarter from $847 million in Q2 2011 to $1.4 billion in Q2 2012, there's plenty of reason for optimism. As for Apple's other iconic device – the iPad – Hesse wouldn't comment as to whether his company might someday sell the popular tablet PC.
While Hesse didn't specifically tackle the hot topic of the month – AT&T and Verizon's shared data plans – he did say that he expects the average home will soon have multiple devices operating on his company's network. Both Sprint and T-Mobile have been critical of the new plans from their larger rivals, saying the plans – which allow users to put multiple devices in one data pool – are both expensive and can lead to bill shock.
"We used to think five years ago that growth in the wireless industry is dead when you get to 100 percent penetration," the USA Today quoted Hesse as saying. "Now we see numbers much north of that as customers have a variety of devices – wireless chips in your shirts, in your car, in many other areas. It's just another opportunity for us to increase revenues as an industry."