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Sprint targets prepay users with LTE

US carrier Sprint has announced the launch of three LTE smartphones for users on its Virgin Mobile USA and Boost Mobile prepaid MVNO brands, making it the first tier one operator in the US to market LTE services to prepaid customers.

Sprint is not the first operator to offer prepaid LTE in the country, as MetroPCS has had LTE available on a no-contract basis since November 2010. However, unlike MetroPCS, Sprint’s approach reinforces the idea that the LTE proposition is about cost savings rather than revenue generation, according to Sara Kaufman, telco strategy analyst at Ovum.

Sprint is attempting to leverage this idea as a differentiator for its prepaid customers by offering LTE tariffs for $35 per month, which is $15 lower than MetroPCS’s comparable LTE offering.

“However, Sprint’s prepaid LTE tariff is as much a defensive move as it is an offensive one. While the operator’s prepaid subscriber base of 15.5 million is the largest among its competitors, other operators are beginning to make gains in the prepaid segment. For example, Sprint’s year-on-year prepaid growth of eight per cent in 3Q12 was dwarfed by Verizon, T-Mobile, and US Cellular’s respective growth rates of 22 per cent, 18 per cent, and 29 per cent,” Kaufman said.

“Sprint’s new LTE offering creates a new differentiator that will complement its unlimited data offering. It will also provide customers with more prepaid services and device choices in a market where tier one carriers still tend to save the best devices and services for their postpaid customers. The move also preempts any attempt from T-Mobile USA to corner the “best value LTE” message when it launches its LTE network in 2014.”

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