July 11, 2013 / 8:22 PM / 4 years ago

UPDATE 2-Sprint promises a lifetime of unlimited data service

By Sinead Carew

NEW YORK, July 11 (Reuters) - Sprint Corp on Thursday offered unlimited data services for the lifetime of an account, as the No. 3 U.S. wireless operator looks to lure customers away from bigger rivals Verizon Wireless and AT&T Inc.

The announcement came just a day after SoftBank Corp closed its $21.6 billion purchase of 78 percent of Sprint and two days after Sprint closed its buyout of Clearwire Corp, which has a vast amount of wireless airwaves licenses.

Sprint already offers unlimited data services for a flat monthly fee, but because of network capacity concerns analysts have long questioned whether it would eventually be forced to follow its rivals who charge consumers depending on the amount of data they use.

Sprint Chief Executive Dan Hesse told Reuters the new guarantee would reassure customers worried about leaving AT&T or Verizon Wireless for Sprint only to have the offer of unlimited services pulled at some point.

“Our research has shown that is a big issue for us in attracting AT&T and Verizon customers,” he said, adding that the guarantee “clearly differentiates” Sprint from its rivals.

Hesse, who has been battling customer losses at Sprint since he took on the top job in December 2007, said he had to complete the Clearwire deal so Sprint could have “the capacity to be able to offer an unlimited guarantee for life.”

Without Clearwire’s airwaves, Hesse said Sprint “would have run out of gas” on capacity in a few years.

Sprint, which is years behind its big competitors in upgrading to high-speed data services, is working on a multi-billion dollar network to close the gap. It will use cash from SoftBank and Clearwire airwaves to support the effort.

But while Sprint’s ability to offer unlimited services at a flat fee gives it a marketing advantage, BTIG analyst Walt Piecyk thinks its success in luring customers away from rivals will depend mostly on how quickly it can beef up its network.

“They need to change the perception of their network,” Piecyk said.

SoftBank has said its top priority at Sprint will be to improve the network as quickly as possible.

Analysts expect the SoftBank and Clearwire deal to amp up competition in the U.S. wireless market because Japan’s SoftBank, run by billionaire Masayoshi Son, is famous for aggressive pricing in its home market.

Son, who will be the Chairman at Sprint, also won a bitter battle with Dish Network Corp Chairman Charlie Ergen to buy both Sprint and Clearwire.

“The excitement for investors and consumers is that Sprint now has the spectrum assets, the money to build its network and a leader that has the courage to do it,” Piecyk said. “Whether they can execute on that remains to be seen.”

Along with AT&T and Verizon Wireless, a venture of Verizon Communications and Vodafone Group Plc, Sprint also has to contend with tough smaller rival T-Mobile US Inc , the No. 4 U.S. mobile service provider.

On the day that Sprint closed its SoftBank deal, T-Mobile CEO John Legere announced his company would allow customers to upgrade their phones every six months, which is four times more often than its competitors.

Hesse declined to comment on any other changes Sprint and SoftBank will put in place now that the deals are closed.

Sprint also made some small pricing tweaks on Thursday to simplify family plans and service plans for individual smartphone users.

Under its latest offerings, smartphone users will pay $240 less per year than the customers of market leader Verizon Wireless and $120 less per year than No. 2 U.S. operator AT&T and T-Mobile US.

The shares of Sprint, which changed its name from Sprint Nextel to Sprint Corp after the deal, will trade on a “when issued” basis until Friday when it will begin trading again under the S ticker symbol.

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