uploads///Telecom Sprint Q Prepaid Net Additions

Why Sprint’s Prepaid Net Additions Are Still Pressured

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Dec. 4 2020, Updated 10:52 a.m. ET

Sprint’s prepaid net losses for the last few quarters

While Sprint (S) appears to be making progress on the postpaid side, the prepaid business is undergoing restructuring. It’s losing more subscribers than it’s gaining on the postpaid side. In fiscal 3Q16, Sprint lost 501,000 prepaid subscribers, which compares to 427,000 in fiscal 2Q16 and 491,000 in fiscal 3Q15.

On March 7, 2017, at the Deutsche Bank Media, Internet and Telecom Conference, Tarek Robbiati, Sprint’s chief financial officer, spoke about Sprint’s prepaid strategy. He said Sprint is restructuring its prepaid business, which continues to experience losses. The company deactivated approximately 1.2 million low activity subscribers in fiscal 3Q16. It doesn’t expect a material impact to the prepaid revenue since these subscribers have low or no engagement. Sprint could now be aiming to focus more on the quality of its prepaid subscribers.

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Robbiati said, “You’ve got to target some specific segments with aggressive offers. That’s what we’re doing with Boost. That’s the positioning that Boost has. In Virgin, we are positioning it a little bit differently because it appeals to a different audience which is a little bit more aspirational. We are revamping Virgin.”

Peer comparison of prepaid net additions in 4Q16

Verizon (VZ) hasn’t historically focused on the prepaid segment. Recent results show that T-Mobile (TMUS) and AT&T (T) are taking the majority share in the prepaid market. In 4Q16, AT&T added 406,000 net prepaid subscribers. Verizon reported 9,000 prepaid subscriber net losses in 4Q16. T-Mobile reported net prepaid additions of 541,000 subscribers in 4Q16. It gained the most subscribers in both the postpaid and prepaid categories.

At the end of 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, respectively. Verizon had ~5.4 million prepaid subscribers.

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