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Understanding Trends in T-Mobile’s Postpaid Phone Churn Rate

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T-Mobile’s postpaid phone churn rate in 3Q17

T-Mobile’s (TMUS) postpaid phone churn rate continued to fall on a YoY (year-over-year) basis in 3Q17. The company reported a record-low postpaid phone churn rate of 1.23% in 3Q17, compared with 1.32% in 3Q16.

This fall in its postpaid phone churn rate was primarily due to T-Mobile’s MVNO (mobile virtual network operator) transactions, as subscribers transferred had a higher rate of churn.

In 3Q16, T-Mobile had completed a transaction with one of its MVNO partners, and this involved transferring 1.4 million postpaid and prepaid customers to wholesale. The company also witnessed increased loyalty and customer satisfaction from continuous improvements to its network quality and customer service.

Remember, lower churn helps telecom companies save on the acquisition costs related to acquiring a customer, which helps them expand their operating margins.

Peer postpaid phone churn comparison

In 3Q17, among the top four major US wireless carriers, Verizon Communications (VZ) had the best postpaid phone churn rate of 0.75%. AT&T (T) had a postpaid phone churn rate of 0.84%, while in fiscal 2Q17 (ended September 2017), Sprint (S) reported a postpaid phone churn rate of 1.59%.

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