AT&T’s Cricket Wireless prepaid brand has grown to 12.4 million subscribers, an increase of more than 2 million in the last two years.
It’s been a challenging last two years for a lot of people, with limited in-person contact and reliance on wireless devices to stay connected, noted Cricket Wireless President John Dwyer in a press release.
AT&T’s prepaid brands include Cricket and AT&T Prepaid. AT&T bills itself as the fastest growing prepaid carrier in the U.S. since 2019, serving more than 19 million total prepaid subscribers. Prepaid churn was less than 3% in the third quarter, when AT&T added 249,000 prepaid phone customers.
As for Cricket’s rate plans, the company is removing the 8 Mbps speed caps on its $30, $40 and $55/month plans. Cricket started offering 5G on some plans last year, but now it's including 5G access on all its plans, which means existing customers on its current rate plans will get access to 5G for $25 a month per line when they have four lines of service.
The $55/month plan has unlimited data but not the other bells and whistles that are in its $60/month plan, according to Wave7 Research principal Jeff Moore. Cricket’s been giving a lot of prominent signage and advertising to its $60 offer, which includes HBO Max and a year of Sam’s Club membership, he said.
In addition, AT&T has been “very loud and proud” about the amount of hotspot and cloud data that comes with that $60 plan. It’s basically AT&T’s way of improving the ARPU at Cricket, he noted.
Postpaid, prepaid balancing act
Even though the lines between prepaid and postpaid have blurred over the years, there always seems to be a balancing act when carriers offer both postpaid and prepaid services.
One question in all of this is if AT&T removes the speed caps, is there a risk of cannibalizing its postpaid base? “Obviously, they want their Cricket customers to be happy but you want to keep some distance between AT&T postpaid and Cricket,” Moore said.
Cricket’s main competition these days is Metro by T-Mobile and Boost Mobile, the latter of which was acquired by Dish Network in 2020. All three are heavily focused on urban America, where a lion’s share of the prepaid customers live, but Cricket has a stronger presence than Metro and Boost in rural America – in the sense that if you visit smaller towns, you’re more likely to find a Cricket store than the other two, Moore said.
While Metro by T-Mobile is the prepaid brand of T-Mobile, the “un-carrier” has been locked in a dispute with Dish over the shutdown of Sprint’s old CDMA network, which a percentage of Boost customers still use. T-Mobile recently extended the life of the CDMA network by three additional months, but Dish insists that still isn’t enough time to transition Boost customers.
Meanwhile, Dish struck a separate MVNO agreement with AT&T, and Boost appears to be starting to put a few customers onto the AT&T network, Moore said, citing Sneed Mobile Tech. A lot of restrictions are still attached; for example, the participating store must have a specific type of point of sale (POS) system to activate on AT&T's network, but Wave7 believes the percentage of Boost customers on the AT&T network is likely to grow sharply at the start of 2022.
RELATED: AT&T's Cricket no longer operating corporate stores
Cricket, which went to an exclusively dealer-focused model last year, is actually increasing its number of stores, according to Wave7. Many operators closed stores at the start of the pandemic in 2020 and some stores remained closed for good.
A Cricket spokesman confirmed that Cricket is continuing to open new stores. Cricket currently has a network of more than 4,500 Cricket-branded store locations, all owned and operated by a network of independent authorized retailers, with plans to open more later this year, he said. It also offers Cricket services through national retailers like Walmart and digital platforms like Amazon.
Broader prepaid market
Big changes are afoot in the prepaid market overall. Verizon is pursuing a nearly $7 billion acquisition of América Móvil’s TracFone business, which includes several prepaid brands, including Straight Talk, which is sold at Walmart. If that acquisition is allowed to happen, “the amount of prepaid competition that’s out there is going to go down pretty dramatically,” he said.
Asked how the pandemic affected prepaid, Moore said the government funding seems to have benefited prepaid net adds in 2020, whereas it's benefiting postpaid net adds in 2021. (It's worth noting that a lot of dealer-run prepaid stores remained opened in spring 2020 when corporate stores were closed.)
In its second-quarter 2021 earnings report, América Móvil said that contrary to what happened at the peak of the pandemic where wireless subscribers felt more comfortable taking prepaid plans, they're now seeing stronger demand for postpaid, which intensified due to strong commercial activity and promotions in that segment.
In its more recent third-quarter earnings call, América Móvil CEO Daniel Hajj Aboumrad said they’re seeing a “little bit” of a problem with handsets at TracFone. Like other prepaid companies, they’re selling lower-end handsets, and the problem is in the low-end or mid-end segment handsets as opposed to the higher end. “In the low- and mid-end, we’re facing some challenges to have enough handsets to sell,” he said, according to an October 20 Motley Fool earnings call transcript.
The prepaid segment lost a key supplier when LG exited the market earlier this year, with LG citing intentions to focus on more lucrative markets like smart homes, robotics and business-to-business solutions.
Note: Story updated with comment from Cricket about more stores opening.