Boost Mobile LLC’s new retail concept and expansion will add a few hundred jobs in Orange County as the low-cost carrier tries to reverse deep customer losses of the last few years.
The Irvine-based prepaid, no-contract brand operated by telecom giant Sprint Corp. plans to add 25 Next Generation stores here over the next two years and remodel 10 existing locations with a more modern, open-concept design within 12 months.
The build-out, part of a nationwide expansion plan that will add 1,000 stores, would create at least 200 jobs in OC and hundreds more nationwide.
“It was time for a refresh,” said Burnetta Tate, Boost Mobile director of retail and local marketing, creative services. “We wanted to make sure there was flow to these stores. Something that draws you in.”
The first local Next Gen stores are expected to open this summer in Fullerton and Santa Ana, exclusively selling Boost Mobile and Sprint devices and related services.
The company hired branding specialists Principle Global in the U.K. to carry out the design developed through customer and internal feedback. The typical store is about 1,000 square feet, similar to the size of existing locations, and will no longer utilize large wall fixtures and sections that hinder interactions with the customer, according to Tate.
“It’s been about six years since the last refresh,” she said. “We wanted to improve the retail experience. We wanted to revitalize the brand.”
Nearly all of the brand’s customers visit stores monthly to pay bills and shop for devices. The brand has about 9,000 independently owned and operated outlets. Some sell Boost products exclusively while others sell Boost and other prepaid brands.
Boost Mobile products are also carried at about 7,000 national retailers, such as Walmart, BestBuy, Target and Fry’s Electronics.
Boost Mobile primarily serves subscribers seeking plans without data limits.
Sprint entered the year as OC’s sixth largest telecom, with 541 local workers, according to Business Journal research.
The Overland, Kansas-based telecom doesn’t break down subscription or revenue figures by specific brand, though it indicated in its annual report last month that “significant market pressures” contributed to a loss of Boost Mobile subscribers in the 12 months through March, the end of its fiscal year.
Sprint reported that overall prepaid subscribers, which include customers from its Virgin Mobile and Assurance Wireless brands, totaled about 11.9 million at the end of the March quarter, down 16.7% from the prior year.
The average prepaid customer had a monthly bill of $28.
Virgin Mobile primarily serves subscribers who want control, flexibility and connectivity through various plans with high-speed data options. It’s also designated as a “Lifeline-only Eligible Telecommunications Carrier” for eligible low-income consumers in certain states. Assurance Wireless provides eligible subscribers who meet income requirements or those receiving government assistance with a free wireless phone, 350 free local and long-distance monthly voice minutes, and unlimited free texts under the Lifeline Program.
Sprint has lost 3.7 million prepaid subscribers in the last two years, a period that included six consecutive quarterly losses. The streak ended in the March quarter when Sprint added about 180,000 customers from the December quarter, according to regulatory filings.
Boost Mobile hopes to win back lost customers and attract new ones through a national marketing and advertising campaign launched last month.
The “Project Switch” campaign highlights its “four lines for $100” offer, focusing on simplicity and the ease of switching carriers to Boost. Irvine-based Schiefer Chopshop developed and produced the campaign and the “Make the Switch” TV spot, which is airing in English and Spanish on CW, ABC, Fox, NBC, Univision, Telemundo, MTV, VH1, TNT, TBS, USA, E!, ESPN, BET, UniMás, NBC Universal and ESPN Deportes. The campaign includes billboards, social media and digital advertising.
The Boost brand was a key element in Sprint’s $36 billion takeover of Nextel in 2005, creating the third largest wireless carrier in the U.S. behind Cingular Wireless and Verizon Wireless. Sprint is now fourth, behind Verizon, AT&T and T-Mobile, based on subscriptions.
Boost Mobile was the only Nextel brand to survive as the industry experienced massive consolidation and failures over the following decade.
Now and Then
Boost Mobile competes against the likes of MetroPCS and Republic Wireless in one of the mostly hotly contested segments in telecom, in which consumers can drop carriers at any time and join others if unhappy about service, connectivity and data plans.
Entrepreneur Peter Adderton, now chief executive of virtual reality camera maker 360fly Inc., established Boost Mobile in Australia and New Zealand in 1999, growing it past $500 million in revenue before the sale. He won over Nextel executives in the U.S. with his idea to market no-contract mobile phone subscriptions to younger users in urban areas with a $1-a-day plan for unlimited push-to-talk services.
The joint venture brought the brand to the U.S and Irvine in 2001 but nearly derailed at the 11th hour amid the dot-com bust.
Parent Hemorrhaging
The recent developments at Boost come amid a multiyear, global restructuring plan at Sprint that aims to cut billions in operating expenses and hundreds of jobs. The company reported more than $2.1 billion in reductions year-over-year and cut roughly 2,000 jobs to 28,000 worldwide employees, according to its annual report.
It has cut $3.4 billion in operating expenses over the last two years.
Sprint grew revenue 4% in the 12 months through March to $33.3 billion, its first year-over-year gain in three years. The company pared its net loss to $1.2 billion in the last fiscal year, compared to a loss of $2 billion the prior year.
Sprint has lost more than $8.4 billion in the last four years.
