Multiple sources are reporting that T-Mobile is closing down more Metro by T-Mobile prepaid stores – to now include possibly 1,500 to 2,000 exclusive Metro by T-Mobile shops.
T-Mobile provided the following statement after this story first published: "We are always optimizing our retail footprint as a normal course of business to ensure we are in the best position to support the thousands of communities we serve across the U.S. We recently notified some dealer stores that we will transition them to T-Mobile stores and we will also close a small number of redundant locations.”
Previous reports said a number of non-exclusive Metro by T-Mobile dealers were given termination notices. This time, the closures are for stores that sell only Metro by T-Mobile as opposed to the ones that sell multiple brands, including those from other carriers.
The National Wireless Independent Dealer Association (NWIDA) reported on Wednesday that it confirmed that Metro by T-Mobile issued 120-day termination letters to anywhere from 5% to 15% of stores owned by larger dealers, as well as stores that were at “end of lease” and low performers.
Sources say it’s no coincidence the closures come a month after the T-Mobile/Sprint transaction closed on April 1 and they say COVID-19 is not the culprit, although more people are buying online versus in a store during the pandemic. NWIDA said some T-Mobile branded stores also will be closed.
Peter Adderton, the founder of Boost Mobile in Australia and in the U.S. who has been a vocal advocate for the Boost brand and for dealers since the merger was first proposed, figures the latest closures affect about 6,000 people. He cited one dealer who said he has to close 95 stores, some as early as May 1.
In their arguments leading up to the merger finally getting approved, executives at both T-Mobile and Sprint argued that it would not lead to the kind of job losses that many opponents were predicting. They pledged to create jobs, not cut them.
“The whole thing is exactly how we called it, and no one is calling them out. It’s so disingenuous,” Adderton told Fierce, adding that it’s not because of COVID-19. Many retailers in other industries are closing stores during the crisis but plan to reopen once it’s safe to do so.
As part of the government’s remedy for the merger, Dish Network is teed up to buy the Boost business and operate that while it builds its own facilities-based 5G stand-alone (SA) network. Boost is transitioning to using the T-Mobile network, and as long as Boost is selling its services, there’s no reason for T-Mobile to keep Metro stores open next door to the Boost stores.
“They simply don’t need them because they’ve got Boost. They’ve got a store next door that is connecting to their network, so they’re not losing the subscriber. The subscriber is just going from Metro across to Boost, but it all ends up in T-Mobile’s back pocket. They just don’t need the added expense. Stores cost them money,” including commissions, he said. “A Boost customer is a T-Mobile customer.”
Dish has a 90-day window to close the Boost transaction; the clock started with the filing of the Consent Decree, which happened to be the same day the transaction closed.
"We look forward to closing the Boost transaction and working with all of our Boost partners, including the independently-owned stores," Dish said in a statement provided to Fierce on Thursday.
Coke & Pepsi of prepaid
T-Mobile, which pointed to its acquisition of Metro PCS as a model for how it would successfully integrate Sprint, has been de-emphasizing the prepaid market for a while now, according to Jeff Moore, principal of Wave7 Research that closely tracks the space.
“I would say Metro and Boost are the Coke and Pepsi of the prepaid world,” Moore said. However, now Boost to some extent is becoming a partner of T-Mobile since it will be using the T-Mobile network and serve as a source of wholesale revenues.
While Metro exits the independent multi-carrier dealer channel, some of the slack might be picked up by AT&T’s Cricket brand, which Wave7 predicts is likely to enter that channel with a launch in the Baltimore-Washington, D.C., area before going national.
Overall, the expectation is a number of Sprint and T-Mobile postpaid retail stores will be closing. “You can’t help but make that observation. The T-Mobile stores in general are right next to Sprint stores,” Moore said. It’s his understanding the approach will include looking at a number of factors in deciding which ones close and which ones stay open, including rent, store traffic, visibility and sales levels. T-Mobile stores likely will be favored because there are costs related to rebranding, he noted.
Editor's Note: Story updated to correct the circumstances of when Dish is required to close the Boost acquisition and add comment from T-Mobile.