T-Mobile’s Prepaid Net Additions in 1Q17: What to Expect
T-Mobile’s prepaid subscriber growth
T-Mobile (TMUS) is optimistic about the continued growth of its MetroPCS prepaid brand. According to a FierceWireless report on April 3, 2017, T-Mobile’s “estimated prepaid net adds [fell] from 750,000 to 525,000 due in part to ‘perceived improvements at Sprint.'”
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In 4Q16, T-Mobile added 541,000 net prepaid subscribers, up from 469,000 in 4Q15, which is a significant increase over the previous year. The main reasons for this increase were the MetroPCS brand, which continues to benefit from increased distribution, and T-Mobile’s improving network, which continues to capture the majority of industry net additions.
This increase was partially offset, however, by subscriber migrations from prepaid to postpaid, totaling 210,000 in 4Q16—as compared to 250,000 in 3Q16 and 210,000 in 4Q15.
Although Verizon Communications (VZ) has not historically focused on the prepaid segment, recent results show that T-Mobile and AT&T (T) are taking the majority of shares in the prepaid market. In calendar 4Q16, Sprint (S) lost 501,000 net prepaid subscribers, whereas Verizon reported 9,000 prepaid subscriber net losses in 4Q16. AT&T reported net prepaid additions of 406,000 subscribers during the same quarter, leaving T-Mobile with the highest gains in postpaid and prepaid.
At the end of calendar 4Q16, T-Mobile’s prepaid subscriber base was the largest at ~19.8 million. Sprint and AT&T followed, with ~11.8 million and ~13.5 million prepaid subscribers, respectively. Verizon had ~5.4 million prepaid subscribers.
In the next part, we’ll discuss postpaid phone churn rates in 1Q17.