* Sees 53 Boost U.S. stores by year end
* Cautiously optimistic about unlimited plan prospects
* Says all the unlimited low-hanging fruit not picked yet
* Sprint shares up 2 cents at $5.37 on NYSE
By Sinead Carew
NEW YORK, May 6 (Reuters) - Bracing for increasingly intense competition in the prepaid wireless market, Sprint Nextel Corp’s (S.N) Boost Mobile unit is expanding distribution with 50 new exclusive stores by the end of 2009.
Boost’s launch of a new $50-a-month unlimited service plan in the first quarter produced growth in Sprint’s prepaid customers for the first time in several quarters. These consumers pay for calls in advance without having to commit to a monthly contract.
Because the plan also attracted competing services from rivals such as T-Mobile USA, owned by Deutsche Telekom (DTEGn.DE), and Virgin Mobile USA Inc VM.N, Boost head Matt Carter is looking at ways he can keep winning market share.
“What’s important to us is street visibility,” Carter told Reuters as he outlined the plan to expand the number of Boost-branded stores from three to 53 this year. “We think it’s going to help us quite a lot,” he said in an interview.
On top of existing Boost stores in Los Angeles, Miami and Houston, the company’s retail partners in 10 cities including New York, Philadelphia, Chicago and Atlanta will open stores that only sell the Boost service this quarter. Another 40 stores will be opened by year end, Carter said.
The popularity of services from Boost and rivals MetroPCS Communications Inc PCS.N and Leap Wireless International Inc LEAP.O has been rising in the weak economy.
“You’re seeing the mainstreaming of prepaid. It’s not just the default option any longer,” said Carter, explaining that consumers only chose prepaid in the past if they were rejected for monthly billing plans because of weak credit ratings.
Now the question is how to keep up the momentum for Carter, whose new plan turned Sprint’s fourth quarter net loss of 314,000 prepaid customers into an addition of 674,000 prepaid customers in the first quarter.
Even though the executive said he believes Boost has not yet signed up “all the low hanging fruit” of pent-up demand for the new service, he is still “cautiously optimistic” because of concerns about a price war with other prepaid providers.
The two biggest U.S. mobile services Verizon Wireless, owned by Verizon Communications (VZ.N) and Vodafone Group Plc (VOD.L), and AT&T Inc (T.N) have steered clear of competing directly with services like Boost’s so far.
But Virgin Mobile USA has launched a $50-a-month plan and T-Mobile USA, the No. 4 U.S. operator, has experimented with an unlimited plan in markets such as San Francisco and is expected by some analysts to expand the service nationwide.
Carter says he has no plans to cut Boost prices, but he cannot be sure that “irrational competitors” will not hurt growth by offering deep discounts.
“They’re certainly feeling the presence of Boost Mobile,” he said, without referring to a specific rivals. “You don’t know what they’ll do,” he said.
(Reporting by Sinead Carew; Editing by Richard Chang)
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