There's a lot of similarities between Sprint and beleaguered tech company BlackBerry (BBRY), which suffered from many self-inflicted wounds. In came John Chen. BlackBerry's culture changed immediately. References became less about BlackBerry's deficiencies and more about what the company can still offer to companies in need of its services. It's a simple but effective plan.

Sprint, which still has roughly 16% of the wireless market -- AT&T and Verizon have roughly 30% each -- can benefit from simplicity.

Marcelo Claure takes over a company operating in an industry that becoming increasingly saturated. Not to mention, he has to deal with cutthroat pricing. T-Mobile's "Uncarrier" strategy, which has lead to meaningful market-share gains, has forced both Verizon and AT&T to cut their prices. They have promised "More Everything" and "Next," respectively.

While the price war is great for consumers, it places Sprint -- which is already suffering from high churn rate in customer cancellations and a low average revenue per user -- in a tough situation. This means that things may get worse for a while before they get better.

First, Claure will have to spend money to complete Sprint's LTE network buildout. Secondly, he'll need to come up with a new marketing strategy to change the company's poor image to help stop bleeding subscribers. As noted, the market is already saturated. So the only way for Sprint to grow is to get users to switch from AT&T and Verizon. T-Mobile quickly figured this out.

All told, Claure must decide how he wants to attack these challenges. His job is to change the narrative. Masayoshi Son will not rest until Sprint becomes a success. He may not have been able to buy T-Mobile.

But that does not mean Sprint can't adopt T-Mobile's strategies.

At the time of publication, the author held no positions in any of the stocks mentioned, although positions may change at any time.

Follow @Richard_WSPB

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.


TheStreet Ratings team rates AT&T INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate AT&T INC (T) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels, largely solid financial position with reasonable debt levels by most measures, notable return on equity and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 1.8%. Since the same quarter one year prior, revenues slightly increased by 1.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.91, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that T's debt-to-equity ratio is low, the quick ratio, which is currently 0.56, displays a potential problem in covering short-term cash needs.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Diversified Telecommunication Services industry and the overall market on the basis of return on equity, AT&T INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • The gross profit margin for AT&T INC is rather high; currently it is at 56.37%. Regardless of T's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, T's net profit margin of 10.88% compares favorably to the industry average.

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