It’s been more than two years since Japanese mobile powerhouse SoftBank bought Sprint and the carrier is still a complete mess that’s losing both money and postpaid subscribers each quarter with depressing regularity. Now Bloomberg reports that the sick man of American wireless isn’t just hurting itself anymore but is now hurting its parent company — or, some might say, its Framily company.
“SoftBank Corp. the Japanese wireless carrier led by billionaire Masayoshi Son, cut its full-year profit forecast 10 percent on widening losses at its Sprint Corp. unit in the U.S.,” writes Bloomberg, which also quotes an analyst who says that Sprint’s “poor” fiscal Q2 earnings were so bad that they have “affected SoftBank’s performance.”
Despite initial optimism about its acquisition of Sprint, SoftBank has been continuously frustrated in its efforts to turn the carrier around. Sprint faces a shortage of low-frequency contiguous spectrum like what Verizon and AT&T have and it’s still reeling from its disastrous decisions to merge with Nextel and to initially choose WiMAX over LTE as its 4G wireless technology. SoftBank has tried unsuccessfully to merge Sprint with T-Mobile to acquire more spectrum and it’s tried to compete more on price recently but so far nothing has stopped Sprint’s downward slide.
Bloomberg says that SoftBank CEO Masayoshi Son now says Sprint’s strategy is to sacrifice short-term profitability in exchange for building a larger base of postpaid subscribers, which deliver significantly more average revenue per user (ARPU) than the prepaid customers Sprint has lured in with bargain-bin wireless plans over the years.
In other words, the coming quarters should see Sprint lose even more money while adding more customers… and that’s the best-case scenario.