Why CEO Marcelo Claure believes Sprint’s recovery is far away

Why Sprint’s stock plunged after the earnings announcement (Part 6 of 16)

(Continued from Part 5)

Recovery is far away

Marcelo Claure joined Sprint (S) as the company's CEO in August. Under the fresh leadership, Sprint is optimistic that its fortunes will turn around. He took a number of bold steps in order to gain subscribers. He introduced family plans that offered double the data compared to Verizon (VZ) and AT&T (T). The data was offered at a lower price.

Claure also introduced a $60 per month unlimited data, text, and voice plan that undercuts T-Mobile's (TMUS) similar offering at $80 per month. He introduced an unlimited plan with Apple's (AAPL) iPhone 6 for an attractive $50 per month.

Despite these efforts, Sprint still continues to struggle in the U.S. telecom industry. Earlier in the series, we discussed how Sprint's investors were disappointed with the company's fiscal 2Q14 results. Its stock decreased 25%.

Clearly, Sprint failed to live up to the optimism that Claure provided. He blamed the disappointing results on the company's weak position before he joined. He mentioned that the the company's acquired customers had credit quality below industry standards before he joined. He also mentioned that the company had no clear value proposition for consumers. As a result, it had the lowest share of gross subscribers in the market.

Sprint's customer experience level is at the bottom

Due to the above mentioned issues, Sprint is at the bottom among its peers in terms of customer experience. According to a survey conducted by Temkin for customer experience, TracFone, Virgin Mobile, AT&T, T-Mobile, Verizon, and MetroPCS were all ahead of Sprint in terms of customer experience rating. Only U.S. Cellular was behind Sprint.

Now, Claure believes that these trends won't be reversed overnight. It will take a long time before the actual recovery happens. The company's first objective is to achieve postpaid net subscriber additions, followed by postpaid phone net additions. They drive profitability.

Continue to Part 7

Browse this series on Market Realist:

• Part 1 – Must-know: Sprint's stock decreased after the earnings
• Part 2 – Why Apple's iPhone 6 could instill life into Sprint
• Part 3 – Why Sprint is targeting prime customers to improve its churn rate

• Finance
• Investment & Company Information
• Marcelo Claure
• Sprint