Is Sprint’s Prepaid Segment Turning a Corner?

In the previous part of this series, we discussed Sprint’s (S) postpaid phone subscriber net additions in fiscal 4Q16, which ended in March 2017. Now let’s take a look at Sprint’s prepaid subscriber net additions. Sprint reported positive prepaid net additions in fiscal 4Q16 for the first time in the last seven quarters.

In fiscal 4Q16, Sprint added 180,000 prepaid subscribers as compared to a loss of 264,000 in fiscal 4Q15. This increase in prepaid subscribers was driven by a strong performance in the Boost brand, whereas Sprint plans to relaunch the Virgin brand with a strong value proposition, including a unique and disruptive offer in conjunction with Apple’s (AAPL) iPhone.

According to a FierceWireless report on May 3, 2017, “Virgin Mobile relaunch—which was originally slated for late last year—will occur in July in the form of a “disruptive” brand that may expand beyond a simple prepaid wireless service.”

Verizon (VZ) hasn’t historically focused on the prepaid segment, and recent results indicate that T-Mobile (TMUS) and AT&T (T) are taking the majority of the market share in the prepaid market. In 1Q17, AT&T and T-Mobile added 282,000 and 386,000 net prepaid subscribers, respectively. Meanwhile, Verizon reported 17,000 prepaid subscriber net losses in 1Q17, which means that T-Mobile gained the most subscribers both in the postpaid and prepaid categories.

At the end of 1Q17, T-Mobile’s prepaid subscriber base was the largest at ~20.2 million. Sprint and AT&T followed with ~12.0 million and ~13.8 million prepaid subscribers, respectively. Verizon had ~5.4 million prepaid subscribers.

In the next article of this series, we’ll discuss Sprint’s postpaid phone churn rate.