Summary
It is a smart move on the part of Sprint to keep the Virgin Mobile brand, at least for a while. Although its marketing costs will increase in supporting another brand, Sprint needs to absorb as much goodwill from the Virgin name as possible. Since late 2006, we have been pointing out how much better Virgin Mobile has fared in terms of customer perception than Sprint, despite the two sharing the same network and the same support personnel.
Analysis
Virgin Mobile offered simpler billing much sooner than Sprint and was way ahead on moving towards an all-you-can-eat package. One can easily believe that “keep[ing] both [Virgin and Boost] brands active in the market...was a very conscious part of [its] decision to acquire Virgin” and “where one plus one can equal three.” The comments by Sprint’s CEO on 4G are noteworthy. There are advantages to saying, “We'll be the only 4G carrier [of the four major wireless providers in the US].” Despite what seem to be obvious long-term moves to LTE, such as totally giving up operational control to Clearwire, Sprint can have its cake and eat it, too. Of course, the excuses for not being more aggressive with WiMAX continue to mount up with the focus now on lack of “dual-mode capability.” A last observation is the mixed attitude the Sprint CEO has to government intervention in wireless. On the one hand, he points out the competitive nature of the market, on the other, he would like to get some relief on the biggest problem Sprint has had since becoming a wireless company – the lack of last-mile assets.
Samuel Greenholtz consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
