Sprint (S) CFO Tarek Robbiati at JP Morgan Conference 5.25.2016

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Sprint (S) CFO Tarek Robbiati still focused on reducing cost structure

“The priorities ever since I’ve joined were really around, set around cost cutting. So we embarked on a transformation program, which is really around changing – fundamentally changing the cost structure of Sprint.  We set up a transformation office in September, a couple of weeks after I started with Sprint. And that transmission office involves a number of initiatives, several hundreds of them geared at cutting cost across the organization and nothing has left unturned.”

For example, got rid of what they perceived to be marketing inefficiencies 

“So we simply stop doing a number of things that we consider to be inefficient. And one example I can give you is the sponsorships that we’ve got to, as we mentioned, we terminated the agreements with NASDAQ and NBA. This was probably the right thing to do, because those types of marketing dollars were not really resonating with our customer base. In fact, if you look at it year-on-year, we cut it 12% in our marketing dollars without altering our ability to grow customers, in fact, our phone gross additions have grown by 4% over the same period. So there was a fair bit of inefficiency in that space.”

Still trying to figure out how to optimize their distribution and store footprint

“So distribution is probably the area where we are a little bit more cautious about. This is not around generating net cost reductions. Sprint distribution is probably below par. Even though, we did, I would say a very interesting and opportunistic deal with RadioShack. We are still not where we would like to be from a distribution standpoint.   So there would be some stores that we have that would probably shutdown, because in the wrong location they have low traffic, low footfall, other stores that we need to open in the areas there where we see the traffic in the footfall.”

Now using a regional operating structure which gives them more granularity into the profitability or unprofitability of various sub-markets

“So the new operating model is really a major departure from what we used to do. And it’s the first thing that has occurred to me when I arrived was, we needed to change the way we operated, mainly because this is the big country, and it’s not a homogeneous country, you have very different market realities in California in the South, Northeast and in the center of the country.  So you’ve got to be organized in the services business like telco space – like telco space in a way that understands that the go-to-market has to be tuned to the realities that you have in each area. And so we embarked on regionalizing our company. We’ve created four areas that effectively reflected the geography of the country, win in those areas. We have the costs in four areas, 18 regions that we manage.  Now what that does is that, you actually have a much, much more granular view of performance.”

Consumers are increasingly choosing to opt for leasing plans

“We have about in our sales 63% of our sales are financed by way of leasing and installment billing. The proportions of that 63% split is 45% leasing and 18% installment billing.”

Sprint (S) CFO Tarek Robbiati said they’ve dramatically improved the quality of their network

“We’ve made considerable progress. Most of the industry observers would tell you that, we are very, very close in most areas with the top of the industry and in some cases, we’re even better. So in cities like Chicago, like Denver, like Houston, really our network is way above the rest.