Customers will have to port in at least one active line from another carrier to qualify. Switchers can choose to pay for the plan that most closely resembles the plan they had at their previous carrier. They can also choose a plan with more data, for example, and still pay a discounted rate. Those savings will last until 2018.
The firm announced the promotion in a press release, before a media call hosted by Chief Executive Officer Marcelo Claure. Sprint had been teasing a big price cut ahead of the event. On Twitter, Claure posted a picture of himself and his team, saying that they had just finalized a pricing plan."The other carriers are not going to like this … guaranteed," he said in a message Tuesday.
Those who switch will also be given a grace period of four weeks to decide whether they like the service. If they change their mind within that period, they'll be able to return the device for full credit, with no charges and no questions asked.
"There's a lot of skepticism about our network," Claure said on the call, explaining why he wanted to include a risk-free trial period in the company's offer.
Existing customers with at least one active line of service will have the option to pick up a free tablet on a two-year contract, with a complimentary year of service. The tablet is the Alcatel OneTouch PIXI 7. That offer has a limited supply.
The company is clearly hoping that those promotions, along with its rebuilt network, can pull it back into growth territory. The company announced Tuesday that it's deploying an improved network it calls the "LTE Plus" in 77 markets nationwide.
Sprint is widely considered the weakest of the four national carriers, having been surpassed by T-Mobile earlier this year as it looks to recover, finally, from the after-effects of its disastrous 2005 merger with Nextel. It's become a whipping boy for T-Mobile's colorful chief executive John Legere, whose flamboyant showmanship has helped garner consumer interest in T-Mobile's parade of plan changes and extra perks — and prompted change in the way plans are sold across the industry.
Sprint has been relatively quiet during this revolution, focusing on overhauling its network and attempting to repair its reputation among consumers.
As good as price cuts sound to consumers, this effort comes at a very difficult time for Sprint. The company is undergoing a major reconstruction right now, with an eye on cutting $2.5 billion in costs — budgeting moves that include slashing staff across the company. The company's original bill-slashing promotion helped add customers but also resulted in a dramatic drop in the amount of money it made off of each individual customer. This new promotion not only incurs those costs, but also the costs associated with the free tablet deal.
Investors were clearly unsure about how to react to the announcement. Shares fell sharply immediately after the reveal, dropping more than 7 percent to $4.05 per share.
Claure said on the press call, however, that he's confident the revenue from additional customers will more than balance the money Sprint is spending on the promotion."We've done a lot of financial analysis and we expect to see a growth in the number of customers we will attract," he said.