U.S. operators across the board reported net losses in prepaid subscribers in the first quarter of 2020, but checks by Wave7 Research show prepaid sales were up modestly in April – likely with the help of stimulus checks.
Wave7 Research estimates that as of May 8, 19,270 of 20,160 prepaid stores were open, reaching 96%, which is up from an April 8 estimate that 73% of stores were open and an April 22 estimate that 87% were open. The firm estimates that 98% of Cricket stores, 95% of Metro stores, and 95% of Boost stores are open.
#TMobile 1Q20 #Prepaid - net loss 128K subs w/115K adds going to branded postpaid. Along with #Sprint's 10K losses reported last week & competitors 1Q20 prepaid results, the category was all negative. pic.twitter.com/ulokr3n5hi— Bill Ho (@billho888) May 6, 2020
Most of the stores have reduced hours and some are closed on Sundays. According to Wave7’s sources, most multi-carrier dealer stores remain open and many of those sell things other than wireless, including in some cases food and electronics. Some also do phone repairs.
“Handset supply is fine, aside from the iPhone SE,” said Wave7 in its May 14 prepaid report. “That said, the situation is not normal, as store hours are shorter, there are limits to store visitors, and there are social distancing policies in stores. Also, Best Buy remains curbside-only for now, with 200 stores opening in May for appointment-only visits.”
Before the pandemic, Wave7 was reporting that things were actually looking better for prepaid this year compared with last year. Then COVID-19 and stay-at-home orders hit. First-quarter results included the last two weeks of March, when the pandemic shut down a lot of businesses. Those two weeks, or one-sixth of the quarter, really tanked the results for prepaid, noted Jeff Moore, principal at Wave7.
Looking forward, Wave7 has started its latest survey of postpaid stores and while the results aren’t ready yet, Moore said he expects to see most Sprint stores back open and “we’ll see about the others.” However, without another round of stimulus checks, he's not expecting May to be a repeat of April in terms of prepaid sales.
Which Sprint stores get rebranded?
The big question is which Sprint stores survive to become rebranded to T-Mobile stores. T-Mobile’s merger with Sprint closed on April 1, and on the network side of the house, it’s already made strides in putting Sprint’s 2.5 GHz spectrum to work. On the retail end of things, the long lead-up to the transaction’s closure also provided them time to get some processes in order, but it’s not clear how much could be done until T-Mobile got their hands on Sprint’s books.
Some @TMobile stores are closing -- permanently. We took this pic of a Tmo dealer store in KS today. It closed for the pandemic in March, but looked mostly normal until this week. It has now closed permanently and Wave7 will be monitoring such closures. pic.twitter.com/UZWIy4ELyM— Jeff Moore (@wave7jeff) May 14, 2020
Moore took a picture of a local T-Mobile store that closed in March due to the pandemic and this past week, it appeared to be closed for good, with signage removed. To his surprise, the local Sprint store in Lawrence, Kansas, was open as of this past week.
“A little bit of a head scratcher,” he said, because it costs more to rebrand a store. However, this particular Sprint store sits at a high-traffic intersection in the city and the T-Mobile store was in a less visible location. That’s a sample size of one, “but it’s enough to let me know that we need to be watching out for these things.” There was no indication before the pandemic that this particular T-Mobile store would close permanently.
Of course, a lot of T-Mobile and Sprint stores are located in close proximity to one another. Moore said it's his understanding that all things being equal between the T-Mobile and Sprint stores in a given neighborhood, the tie breaker will go to the T-Mobile store because that doesn’t require new signage and all the expenses that go into rebranding.
Unified brand coming
T-Mobile CEO Mike Sievert has said the plan always has been to start advertising as one postpaid T-Mobile brand this summer, but the COVID-19 crisis pushed that from an early summer project to a mid-summer event. He didn’t give a specific date, but some reports suggest August 2.
T-Mobile EVP of Consumer Markets Jon Freier said during the company’s earnings call that T-Mobile on March 16 made the decision to temporarily close the majority, or about 80%, of its company-owned stores in response to the pandemic. The company was able to convert a lot of its employees who typically work in stores to a virtual retail environment before stores started re-opening again.
He also said they’re making progress in terms of getting people up to speed on installing systems so that they can help customers whether they're a legacy Sprint-branded or a T-Mobile customer, regardless if they’re in a Sprint or T-Mobile store.
Wave7 has observed that T-Mobile has withdrawn its emphasis on prepaid via Metro by T-Mobile, exiting the multi-carrier independent dealer channel and closing some prepaid stores. The firm reported that Cricket, AT&T’s prepaid brand, is slowly entering that multi-carrier dealer market, where dealers sell more than one wireless brand.