T-Mobile’s prepaid subscriber growth
In the previous part of this series, we discussed expectations for T-Mobile’s (TMUS) postpaid phone net additions in 2Q17. Let’s now take a look at T-Mobile’s performance in the prepaid category. Wall Street anticipates 245,000 prepaid net additions from T-Mobile in 2Q17.
According to a report from FierceWireless on June 21, 2017, “Prepaid volumes are likely to see elevated quarter-over-quarter headwinds from both seasonality and more aggressive competition, which T-Mobile has chosen not to match (citing ‘challenged economics’ in these competitor offers).”
Earlier in 1Q17, T-Mobile added 386,000 net prepaid subscribers, down from 807,000 in 1Q16, which is a substantial fall from the previous year.
Costs related to prepaid users are far lower than costs related to postpaid users, making them more lucrative. Acquisition charges, maintenance charges, and upfront charges are far less for prepaid users.
T-Mobile’s peer comparison: Prepaid net additions in 1Q17
In calendar 1Q17, Sprint (S) and AT&T (T) added 180,000 and 282,000 net prepaid customers, respectively. Verizon (VZ) lost 17,000 prepaid subscribers. T-Mobile added the most customers in both the prepaid and postpaid categories.
At the end of calendar 1Q17, T-Mobile’s prepaid subscriber base was the highest, at ~20.2 million. AT&T and Sprint had ~13.8 million and ~12.0 million prepaid customers, respectively. Verizon had ~5.4 million prepaid subscribers.