S’s Prepaid Offering Unlikely To Cannibalize Its Postpaid Users
Analyst Chandan Sarkar of Auriga USA maintains his "buy" rating on Sprint Nextel (NYSE: S). The target price for S is set to $5.
Sprint Nextel has announced in the CES that it will offer prepaid services on its CDMA network with the Boost brand. The analyst believes that the offering will not cannibalize S’s existing postpaid customers. The company is not expected to offer roaming facilities in its prepaid offering, which would restrict many postpaid users from switching to prepaid, the analyst mentions.
The launch of Sprint Nextel’s prepaid offering is likely to lead to more competitive pressure for companies such as Leap Wireless (NASDAQ: LEAP) and MetroPCS (PCS), the analyst says. S’s spectrum service, rather than its prepaid offering, is expected to unlock the long-term value of the company’s stock, according to Auriga USA.
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