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Expectations for Verizon’s Prepaid Net Additions in 3Q17

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Verizon’s prepaid customer growth

In the previous part, we discussed the expectations for Verizon’s (VZ) postpaid phone net customer additions in 3Q17. Let’s analyze the performance of Verizon in the prepaid category. It will be interesting to discover the prepaid net customer additions from Verizon in 3Q17, given the increasingly intense competition in the prepaid market.

In 2Q17, Verizon gained 19,000 prepaid net customers, which was a significant improvement compared to 30,000 prepaid customer net losses in 2Q16. This enhancement was mainly due to the impact of new pricing plans for prepaid customers as well as a strong value proposition.

Costs related to prepaid customers are much lower than the costs related to postpaid customers, which makes them more profitable. Acquisition costs, maintenance costs, and upfront expenses are all lower for prepaid customers.

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Verizon’s peer comparison of prepaid net additions in 2Q17

In 2Q17, T-Mobile (TMUS) and AT&T (T) added 94,000 and 267,000 net prepaid customers, respectively. Sprint (S) gained 35,000 net prepaid customers in fiscal 1Q17.[1. fiscal 1Q17 ended June 2017]

In 2Q17, Verizon’s retail postpaid customer base was the largest among the top four US telecom carriers. However, Verizon had the smallest prepaid customer base among these companies.

T-Mobile’s prepaid subscriber base was the largest, with 20.3 million customers. AT&T and Sprint followed with 14.2 million and 8.7 million prepaid subscribers, respectively. Verizon had 5.4 million prepaid subscribers.

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