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Expectations for AT&T’s Prepaid Net Additions in 3Q17

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AT&T’s prepaid customers

In the previous part of this series, we saw what to expect for AT&T’s (T) 3Q17 postpaid phone churn rate. Now let’s take a look at AT&T’s anticipated performance in the prepaid space. It will be interesting to see how many prepaid net subscriber additions AT&T has in 3Q17, given the growing intense competition in the prepaid space.

In 2Q17, AT&T gained 267,000 net prepaid subscribers compared to 282,000 in 1Q17. The additions gained strength from the GoPhone and Cricket brands.

Costs associated with prepaid customers are much less than costs associated with postpaid customers, which makes them more profitable. Acquisition expenses, maintenance costs, and upfront costs are all lower for prepaid customers.

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Peer comparison of prepaid net additions

There are indications that AT&T is taking the majority share of the prepaid space. In 2Q17, Verizon (VZ) and T-Mobile (TMUS) gained 19,000 and 94,000 net prepaid customers, respectively. Sprint (S) added 35,000 in fiscal 1Q17 (quarter ended June 2017).

At the end of 2Q17, T-Mobile’s prepaid customer base was the largest, with 20.3 million customers. AT&T and Sprint followed with 14.2 million and 8.7 million prepaid customers, respectively. Verizon had 5.4 million prepaid customers.

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