Sprint Unit Boost Mobile Launches Prepaid Cell Phone Service to Cuba

Boost Mobile, part of Sprint Corp (NYSE:S), on Thursday launched a prepaid plan for U.S. consumers calling and texting Cuba, taking advantage of new, relaxed U.S. commercial regulations with the Communist-run island nation.

The Obama administration's new Cuban policy regulations approved by the Treasury and Commerce departments have opened the door for U.S.-based telecommunications firms to start potentially lucrative services to Cuba.

Last month U.S.-based IDT Corp reached an agreement with Cuba's Empresa de Telecomunicaciones de Cuba SA (ETECSA) to provide direct international long-distance service.

Boost Mobile offers prepaid wireless service to consumers with no need for long-term subscription contracts.

The company announced a $50 monthly plan, allowing customers to pay about $0.30 per minute, which it described as the lowest introductory rate per minute among prepaid carriers to call Cuba. The plan includes unlimited texting.

"That’s a great value," Dow Draper, president of Boost Mobile and Sprint Prepaid, told a news conference. "We hope this is a meaningful start to reducing the costs of calls to Cuba in general, while gaining a few more subscribers."

In a show of solidarity with young Cuban-Americans anxious to improve connectivity with the island, the company is donating $10,000 to Roots of Hope, a group of young Cuban-American professionals at the forefront of President Barack Obama's policy of engagement with Cuba.

After the United States imposed an economic embargo on Cuba in the 1960s, phone communication between the two countries had to pass through third countries, greatly increasing calling costs.

As many as 2 million Cuban-Americans live in the United States, mostly in Florida, many of whom left behind relatives. The service is being rolled out in Miami, the heart of the Cuban-American community.

Scarcely 2 million people out of Cuba's population of 11 million have cell phones. Cuban officials cite the U.S. embargo as the reason for its weak development and say they hope to reach 60 percent mobile-phone access by 2020.

The United States has set connectivity as a priority in its new relationship with Cuba. Telecommunications equipment, technology and services were among the first exemptions to the embargo after Washington and Havana announced a restoration of diplomatic relations in December.

Roots of Hope said it will use the money to fund a program it operates to send cell phones to Cuba.

(Reporting by David Adams and Francisco Alvarado; Editing by Jeffrey Benkoe and Eric Beech)