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How Is Cricket Making Up For AT&T’s Postpaid Phone Losses?

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AT&T’s Cricket and feature phone customer acquisitions

During the recent J.P. Morgan Global Technology, Media and Telecom Conference, Ralph de la Vega, AT&T’s (T) vice chairman and CEO of AT&T Business Solutions and AT&T International, talked about postpaid customer losses and gains in Cricket customers.

Ralph de la Vega stated, “Cricket is our prepaid product, and we compete with Cricket. The customers that we have been losing in postpaid are primarily feature phone customers, whose average revenue per user averages about $35. By contrast, the Cricket customers that we have coming in to funnel average $41.” He also highlighted, “I really like the $41 for a $35 trade-off, despite all the other issues, and we’re growing Cricket as you know to the tune of about 500,000 customers per quarter, which is very, very healthy. In fact, Cricket led the entire industry.”

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AT&T versus peers in the US prepaid market in 1Q16

Among the top four US wireless players, only AT&T and T-Mobile (TMUS) grew their prepaid customer base in 1Q16 on a YoY (year-over-year) basis. AT&T’s prepaid customers in the domestic wireless component increased by a significant ~21.3% and reached ~12.2 million by the end of the quarter. Meanwhile, T-Mobile’s prepaid customers increased ~12.5% YoY to ~18.4 million by the quarter’s end.

The prepaid subscribers of Verizon Communications (VZ) and Sprint (S) decreased YoY by ~9.1% and ~8.3% to ~5.4 million and ~14.4 million, respectively, by the end of 1Q16.

For diversified exposure to AT&T, you may consider investing in the iShares Edge MSCI Minimum Volatility USA ETF (USMV). The company made up ~1.7% of the ETF at the end of April 2016. At the same time, USMV held ~4% of its portfolio in telecom (telecommunications) companies including AT&T, Verizon Communications (VZ), and SBA Communications (SBAC).

In the next part of this series, we’ll look at AT&T’s value proposition in the US telecom space.

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