Sprint Corp S
Q1 2012 Earnings Call Transcript

Transcript Call Date 04/25/2012

Turning to Slide 8, an important near-term financial indicator of success with the iPhone is the percentage of activations that our new customers to Sprint because they represent new sources of revenue.

In the first quarter, 44% for our iPhone activations were new customers, up from 40% in the fourth quarter, above our internal expectations and well in excess of our competitors' results. Additionally, 40% of new Sprint iPhone users reported breaking of contract with their prior carrier to switch to Sprint, evidence that our Sprint brand hallmarks our value and simplicity are resonating with consumers.

Our study also found that over 60% of our iPhone customers who left another carrier to come to Sprint wouldn't have considered switching to us if we did not carry the iPhone.

Longer term, the most important indicator of success with the iPhone is the anticipated lower churn rate of iPhone customers. All of our early-life iPhone customer experience metrics are positive, potential early indicators of longer term churn benefits. To-date, we are experiencing low early-life calls to care and less than half of the returns in exchanges for iPhone users compared to other smartphone users. The evidence so far supports our decision to carry the iPhone.

Turning to Slide 9, and the customer experience, I am on pleased to report that in the first quarter we achieved a new Best Ever Level for Customer Calls to Care across our customer base. Calls per postpaid subscriber were down over 10% from last year. We're also making notable improvements with our prepaid base with calls per subscriber down 19% from last year.

Third-party overall customer satisfaction measures remained at best ever levels. We're not buying satisfaction. Customer care credits in the first quarter were the lowest or best for any quarter on record.

Third-party accolades continued to validate success across our brand and product portfolios. In the quarter, two of our prepaid brand Virgin Mobile and Boost Mobile were named 2012 Customer Service Champions by J.D. Power and Associates among 800 brands considered, and our brands were recognized three times by J.D. Power. Sprint, for highest satisfaction with the purchase experience among full service wireless providers; Virgin Mobile for highest ranked customer service performance among non-contract wireless providers; and Boost Mobile for highest satisfaction with purchase experience among non-contract wireless providers.

Sprint was recently recognized by Atlantic-ACM for excellence in our Wholesale business, for network, provisioning, customer service and sales force. And finally, Frost & Sullivan identified Sprint as an excellent example of an end-to-end mobile solution provider for the small business sector.

As we discussed on last quarter's call, Sprint platform postpaid churn remain elevated in the first quarter at 2% largely due to the involuntary churn impact of some acquisition activities in the second and third quarters of 2011. We continued to expect a step-down in Sprint platform postpaid involuntary churn beginning in the second quarter and improvement in voluntary churn longer term driven by the ongoing improvements in our customer experience, the iPhone and the fact that our percentage of postpaid based on-contract is the highest it has been in four years.

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