Story edited to clarify Sprint deal is not with T-Mobile US affiliate IWireless
Sprint plans to merge its Assurance business with I-Wireless’ Access Wireless in a move to improve targeting of government’s Lifeline program
Sprint is parsing out one of its several prepaid brands, announcing a deal to merge its Assurance Wireless service with I-Wireless’ Access Wireless service. The venture, which will operate under the I-Wireless brand, will focus on the government assisted Lifeline program.
(The venture is also not to be confused, but obviously was, with regional wireless carrier and T-Mobile US network partner IWireless.)
The deal calls for the new entity to be led by I-Wireless founder and CEO Paul McAlesse, and take advantage of Sprint’s network and I-Wireless’ national distribution channels, which includes Kroger grocery stores. Sprint will maintain 70% ownership of the venture, with I-Wireless controlling the remaining 30%.
“We’re excited to move forward with this strategic partnership, which will result in efficiencies for both companies, including financial synergies, such as acquisition costs, device purchasing scale and working capital flexibility,” said Dow Draper, president of Sprint prepaid, in a statement.
The Federal Communications Commission earlier this year moved on plans to add broadband connectivity to the government’s Lifeline program. The proposed program includes minimum service standards designed to ensure supported services meet certain targets; tap into previous Lifeline reforms in establishing a National Eligibility Verifier in order to “deter waste, fraud and abuse” in the program; and a “budget mechanism” to limit Lifeline’s cost to ratepayers.
“This alliance will create a vibrant competitor ready to embrace a modernized Lifeline program,” said McAleese. “As the category transitions to broadband, we’re enthusiastic about the potential to help customers more fully participate in today’s digital economy by making access to employment, education and health care services more affordable to low-income consumers.”
In addition to Assurance, Sprint’s prepaid portfolio includes Boost Mobile, Virgin Mobile USA and the Sprint Prepaid service. The carrier recently altered pricing schemes for its prepaid brands in an attempt to increase competitiveness, which lost a collective 491,000 customers during the final three months of last year. Sprint CEO Marcelo Claure excused the dip by stating the carrier was not interested in chasing lower profit customers.
The announcement came just ahead of Sprint’s scheduled plans to release operating results for the first three months of this year. Sprint rivals AT&T Mobility and T-Mobile US both posted robust Q1 prepaid growth, which could put further pressure on Sprint’s prepaid ambitions.
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