Wednesday, 24 December 2008

Sprint amends agreement with Virgin Mobile – USA

2008 has not been a good year for Sprint as the company has continuously lost subscribers and the fourth quarter is not expected to be much different. This is despite the fact that they scored well on their second straight customer service survey.

The company has an MVNO agreement with Virgin Mobile and is offering more incentives to them for customers added in the fourth quarter of 2008 to boost its growth. The agreement between the two companies is very unique. Firstly, Virgin Mobile will pay Sprint an agreed fee for its network usage. The fee is USD 320 million, USD 370 million and USD 420 million for 2008, 2009 and 2010, respectively. However, Virgin Mobile will receive USD 2.5 for each subscriber added between July 1, 2008 and December 31, 2009, with an upper cap of USD 10 million.

Very recently, the deal between the two was amended. Now, Sprint will pay an additional USD 2 for each customer added by Virgin in the fourth quarter. The cap of USD 10 million is also expected to be removed. Additionally, Virgin Mobile will also pay USD 318 million as their network usage fee in 2008, a drop from an expected payment of USD 320 million.