Sprint Nextel Expands Its Prepaid Strategy

Boost Mobile

Building on its push into prepaid mobile service, Sprint Nextel Thursday unveiled a set of new, lower-priced no-contract plans and handsets as well as plans for a fourth pay-as-you-go mobile brand.

With prepaid customers the fastest-growing segment of its business, Sprint aims to expand further in the category by establishing brands tied to specific consumer types, whether heavy-texting teens or older users with limited cell phone needs. The underlying connection is affordability and flexibility.

The heart of the effort is a relaunched Virgin Mobile brand geared to young users who favor texting and connecting via social networking over talking. The new Beyond Talk plans for Virgin start at $25 for unlimited messaging, email, data and Web access with 300 voice minutes a month. A $60 plan offers unlimited everything.

For another $10, customers can also get a data plan for BlackBerry Curve 8530. In addition to Virgin, Sprint also owns Boost Mobile, which offers a popular $50-a-month unlimited calling and data plan, and Assurance Wireless, a free, government-backed wireless service aimed at eligible low-income consumers.

Sprint next week will also roll out an as-yet-unnamed pay-per-minute brand for traditional voice customers who spend less than $30 a month on service and have no interest in getting on the smartphone bandwagon.

"This is the year that prepaid moves to the forefront of the wireless industry," said Dan Schulman, president of Sprint's prepaid group, in a statement. "In the first quarter of 2010, more than half of the mobile gross additions in the U.S. selected prepaid, and we predict that approximately 70% of the net adds in 2010 will choose plans without a contract."

Even as it continues to lose more lucrative contract customers, Sprint has benefited from the shift toward prepaid service. In its most recent quarter, the carrier lost a net 578,000 postpaid subscribers but added 348,000 prepaid ones.

With Sprint betting big on the prepaid market, it raises the question of whether it may try to acquire remaining independent competitors in the sector like MetroPCS and Leap Wireless. The former today reported first-quarter revenue growth of 22% to $970.5 million fueled by subscriber growth.

"It certainly has some logic to it," said Jonathan Atkin, a wireless analyst at RBC Capital Markets, of a potential Sprint acquisition of other players in the prepaid space. The company acquired Virgin Mobile last July for a reported $483 million.

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