Sprint faces tough questions
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Tue, 13 May 2008 17:10:04 GMT |
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NEW YORK (Reuters) - Sprint Nextel faced multiple questions about how it will turn itself around and stop customers from fleeing its cell phone service at its annual shareholder meeting on Tuesday."Verizon and AT&T have been eating our lunch," in winning high-value customers, one attendee told Chief Executive Dan Hesse during a webcast of the meeting."How did we get into this situation?" and how will Sprint resolve it, the person asked.The meeting was held a day after Sprint said its first-quarter net loss widened to $505 million from $211 million in the year-ago quarter as it lost more than a million high-value customers who pay monthly bills and commit to service contracts of one or two years.Hesse said while Sprint was beginning to see improvements, turning around its performance would "take time."He conceded that Sprint's top rivals AT&T Inc and Verizon Wireless, a venture of Verizon Communications Inc and Vodafone Group Plc , have focused more on customers with prime credit ratings, while Sprint has more customers who have subprime credit ratings and more trouble paying bills.He said the company would address this by focusing first on keeping its existing customers and by trying to sign on new subscribers who are committed to contracts and less likely to cancel their services as quickly as subprime customers."Customers leaving us, on average, have had a higher (average revenue per user) than the customers we are bringing in," Hesse acknowledged; but he said Sprint's offer of unlimited data and voice services for $99.99 a month should change that."We didn't have a compelling offering to keep them," said Hesse, who also said the unlimited service offering would likely reduce the number of calls to Sprint customer services, which has been blamed to a large extent for subscriber frustration."When you take the meter off everything, one would hope they'd never call to question their bill because it will always be the same," said Hesse.Asked about work force reduction efforts at Sprint, which has laid off 4,000 employees, Hesse said the company would not scale back customer services operations unless customer calls were reduced."As we reduce the number of calls coming in, we can reduce the number of people answering the phone," said Hesse, who noted that any cutbacks would start at call centers run by third parties rather than at Sprint's in-house service operations.Shareholders cast the vast majority of their votes to approve the company's slate of nine board members.They narrowly rejected a shareholder proposal for shareholders to be allowed to call special shareholder meetings. About 54 percent of the votes were cast against the proposal while 46 percent were in favor.(Reporting by Sinead Carew, editing by Gerald E. McCormick)
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