Sprint’s prepaid net losses for the last few quarters
In the preceding part of this series, we discussed Sprint’s (S) postpaid phone subscriber net additions in fiscal 2Q16. While Sprint appears to be making progress on the postpaid side, its prepaid business is undergoing restructuring, losing more subscribers than the company is gaining on the postpaid side.
In fiscal 2Q16, Sprint lost 427,000 prepaid subscribers, which was up from 331,000 in fiscal 1Q16 and 188,000 in fiscal 2Q15. This is mainly because Sprint is looking to focus on higher value brands like Boost and Virgin Mobile. Boost continues to perform extremely well on the market, whereas Sprint plans to re-launch the Virgin brand with a strong value proposition. To reduce costs, Sprint has also entered into a joint venture in its Assurance or Lifeline business with Access Wireless, which operates in the same segment.
Sprint is restructuring its prepaid business, which continues to experience losses, and plans to deactivate approximately 2 million low activity subscribers in fiscal 3Q16. Sprint does not expect a material impact to the prepaid revenue given that these subscribers have no or low engagement.
Peer comparisons of prepaid net additions in 3Q16
In 3Q16, T-Mobile (TMUS) gained 684,000 net prepaid subscribers. However, AT&T (T) and Verizon Communications (VZ) gained 304,000 and 83,000 net prepaid subscribers, respectively, which means that T-Mobile gained the maximum subscribers both in the postpaid and prepaid categories.
At the end of 3Q16, T-Mobile’s prepaid subscriber base was the largest among the big four at ~19.3 million. Sprint and AT&T followed T-Mobile with ~13.5 million and ~13 million prepaid subscribers, respectively. Verizon had ~5.5 million prepaid subscribers.
In the next part of this series, we’ll discuss Sprint’s postpaid phone churn rate.