Churn Week Continues: Sprint's Struggles

Sprint Nextel announced their first quarter earnings yesterday, and it looks like their struggle to keep subscribers in their Nextel unit are getting worse.  Yesterday's post focused on Vonage's atrocious 3.3% monthly churn, and today, we'll look at Sprint's 2.45% churn in post-paid wireless subsribers.

Here is Sprint's pattern of post-paid subscriber losses since the beginning of 2007:

	1Q07	2Q07	3Q07	4Q07	1Q08
Net change in Sprint post-paid subscribers	(220,000)	16,000	(337,000)	(683,000)	(1,070,000)

Sprint did say that they expect an improvement in churn in the 2nd quarter, but til now, churn has actually worsened.  Last quarter, and the quarter before, post-paid churn was 2.3%.

It is enormously damaging to a recurring revenue service business to experience churn above 2% per month.

For example, did you know that if you assume a constant rate of gross subscriber additions, a service provider's churn rate can predict the maximum size of the service provider's subscriber base?  The higher the churn rate, the lower the maximum size of your customer base.  Tomorrow, we'll look at how this works.