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Sprint Slashes Bills to Retain Prepaid Wireless Users

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Oct. 14 (Bloomberg) -- Sprint Nextel Corp., the third-largest U.S. mobile-phone carrier, said it will reward customers loyal to its Boost Mobile prepaid brand by lowering their bills every six months.

The carrier will knock $5 off the $50 monthly price of its unlimited talk, text and Web plan after every six months of on-time payments, to drop the bill to as low as $35, Bob Stohrer, Sprint’s prepaid marketing chief, said in an interview.

“It’s just as important to reward our customers and get them to stay around as it is to acquire new customers,” Stohrer said.

The loyalty program is the first of its kind for prepaid mobile plans in the U.S., according to Charles Golvin, a Forrester Research Inc. analyst. Sprint is seeking to retain Boost customers, who tend to leave in greater numbers than the carrier’s other prepaid brand, Virgin Mobile.

Boost customers who lower their bills through the program, known as “Monthly Unlimited with Shrinkage,” will remain at that pricing indefinitely, Stohrer said. Users of Research In Motion Ltd. BlackBerrys can drop their $60 monthly bill to as low as $45, under the program.

“This is the form of program that really means something to prepaid customers who tend to make their choices based on price,” Golvin said in an interview. “But it does come with some risk because customers who will switch for price will leave for price too.”

Sprint added 173,000 prepaid customers in the second quarter, compared with 348,000 in the first quarter.

Boost’s current $50 monthly plan compares with similar plans of $55 for Leap Wireless International Inc. and $50 for MetroPCS Communications Inc. AT&T Inc. and Verizon Wireless don’t offer prepaid plans with unlimited Web use, according to their websites.

Separately, Deutsche Telekom AG’s T-Mobile USA said yesterday it will offer prepaid plans for $70 per month offering unlimited talk, text and up to 2 gigabytes of data use.

Sprint, based in Overland Park, Kansas, fell 7 cents, or 1.5 percent, to $4.56 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have jumped 25 percent this year.

To contact the reporter on this story: Greg Bensinger in New York at gbensinger1@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net