Prepaid customers have long been almost an afterthought for most major U.S. network operators, who have opted instead to focus on postpaid users who often generate higher ARPU and lower churn. But as the growth of smartphone sales slows-- and as the gap between prepaid and postpaid ARPU narrows-- carriers are increasingly focused on the prepaid segment.
Sprint is rapidly losing prepaid customers, and its self-branded prepaid phones are disappearing from retail stores as the carrier prepares to relaunch its Virgin Mobile brand in an effort to boost sales in that market.
Shares of America Movíl plunged nearly 12 percent last week after the carrier posted a disappointing quarter including a 17 percent year-over-year decline in EBITDA. The company lost 458,000 U.S. customers during the quarter, primarily under its TracFone and SafeLink brands, and its U.S. revenue of $1.8 billion was down 3.3 percent from the prior year.
Prepaid consumers are something of an afterthought to some wireless carriers increasingly trying to poach lucrative postpaid users from their competitors. But T-Mobile has actually increased its focus on that segment, as evidenced by the record 807,000 net prepaid customer additions it scored during the first quarter.
Verizon reported an impressive retail postpaid churn rate of.96 percent in the first quarter, surprising analysts who predicted the carrier would lose more customers to T-Mobile and Sprint. But the biggest U.S. mobile network operator continues to bleed prepaid users, opting to cede the market to brands such as MetroPCS and Cricket.
AT&T's prepaid service provider Cricket Wireless unveiled an unlimited talk, text and data plan for $70 a month, touting "a network that is bigger than T-Mobile's." Cricket also offers a $5 monthly "auto pay credit" for users who set up automatic payments, and the sum includes monthly taxes and fees.
Cricket made good on its recent promise to expand its retail footprint in a big way, announcing distribution deals with Best Buy and the lease-to-own retail chain Aaron's.
A California legislator proposed a bill aimed at stopping "burner phones" that can be bought anonymously and used before being discarded.
Sprint's decision to focus on more lucrative subscribers is likely going to increase its current-quarter churn, Wells Fargo Securities said, but will help the carrier's bottom line in the long term. Meanwhile, T-Mobile's aggressive first-quarter promotions will be expensive but will add customers during a traditionally slow quarter, according to the analysts.
Verizon's eagerness to deploy 5G is likely because the carrier is struggling to meet ever-increasing data traffic on its network, T-Mobile CFO Braxton Carter speculated Monday. And its haste could be costly in the long term, he warned.