Verizon in late 2021 purchased TracFone, which had many prepaid brands and 20.1 million subscribers. The transaction also gave the carrier control of Straight Talk, TracFone, Simple Mobile, Total by Verizon (formerly Total Wireless), Walmart Family Mobile, Net10 Wireless, GoSmart Mobile, PagePlus Cellular and SafeLink Wireless.
Then, T-Mobile announced in March that it will acquire Ka’ena Corporation – the company that operates Mint Mobile, Ultra Mobile, and Plum. Plum is an MVNE that helps MVNOs launch services. Ultra Mobile had roughly 750,000 subscribers as of 2017, Wave7 Research has reported.
The truth is that net of these two transactions — TracFone and Ka'ena — the MVNOs’ share of the prepaid market will have dropped dramatically, as a majority of the MVNOs’ share of the prepaid market will have gone over to the national carriers.
T-Mobile’s acquisition of Ka’ena Corporation is subject to regulatory approvals. The New York Post on April 20 reported that the Department of Justice “is weighing a possible lawsuit to block T-Mobile’s $1.35 billion acquisition.”
In addition to this, Dish Network in recent years has purchased Gen Mobile, Republic Wireless and Ting Mobile. The company has been aggressively making efforts to win distribution for Gen Mobile.
So, which MVNOs are left?
Consumer Cellular, an MVNO focused on serving older Americans, has more than 4 million subscribers. Google Fi Wireless – known as Google Fi until recently – has “a couple million customers,” based on information from Roger Entner of Recon Analytics. H2O Wireless had 1 million subscribers when it was acquired by Telrite Holdings in 2019. TextNow has blogged some interesting numbers. However, it is clear that if and when the Ka’ena Corporation closes, a majority of the MVNO market as it was before 2021 will have fallen into the hands of the national carriers.
Carriers’ shrinking wholesale efforts
The flip side of carriers growing retail revenues via acquisitions is that their wholesale efforts, revenues and headcounts are shrinking. I have the sense that they can replace some of these revenues via IoT efforts, but without question, carrier wholesale revenues are down.
Yes, carrier margins are far better for retail sales as opposed to wholesale sales. However, the carrier also has to work to get paid by the customers and can expect to face increased calls to customer care. For years, this reality kept Verizon on the sidelines for monetizing prepaid demand.
How will all this shake out? We will get a better sense of it when prepaid industry leaders gather in Las Vegas for the All Wireless & Prepaid Expo. I am the Conference Director and can announce that Lee Mrazek, TracFone SVP for Indirect Channel, will be delivering the keynote address, followed by many other leaders of the prepaid and payment industries.
Free phones at Walmart
Another new development in prepaid is the rise of free phones at Walmart. Free phones for switchers have been provided for decades at the stores of Boost Mobile, Metro by T-Mobile and Cricket Wireless, but not at Walmart.
The first sign of this came from Metro by T-Mobile, as seen in this November tweet, and the offer of several phones as free with in-store activation remains in place. Signage at Walmart has been strong for a Verizon Prepaid offer of a free Galaxy A03s with in-store activation.
Straight Talk has a new TV ad pitching an offer of a free Motorola G Power with in-store activation on a plan of at least $45/month. This is the first time I can recall ever seeing a free phone from Straight Talk. Cricket Wireless in recent months has had an offer of a free Moto G Pure at Walmart with activation of a new line of at least $40/month.
Why weren't there free phones at Walmart before?
Having free phones at Walmart without restrictions would lead to obvious problems, including dealers selling phones from Walmart rather than getting them from their carrier. Also, customers could use them as “burner phones,” resulting in high churn. Carriers are requiring in-store activation on a plan of a certain level to avoid this. Metro by T-Mobile has only been sold at Walmart since late 2021, and Metro by T-Mobile seems to be the carrier that initiated this trend.
Tax season: Late and weaker
Tax season this year started later and was less impactful than in the past. Historically, tax season has been the time for particularly brisk prepaid sales, as tax refunds are received. However, this has been less impactful in recent years, with the Affordable Connectivity Program making tax season discounts stand out less than before. Certainly, there are solid tax season discounts, but the energy level is less than before. I have not seen a “swatter” pitching Straight Talk at Walmart since before the pandemic.
Battle of the prepaid brand portfolios
Before the founding of Visible in 2018, Verizon Prepaid was Verizon’s only prepaid brand, but now the carrier is selling services via a rich portfolio of seven prepaid brands, and that is not even counting three brands that are being sunsetted – Net10 Wireless, PagePlus Cellular, and GoSmart Mobile. Assuming the Mint transaction is approved, T-Mobile will have its own portfolio of four prepaid brands – Metro by T-Mobile, T-Mobile prepaid, Mint Mobile and Ultra Mobile. Even Dish Network has two brands that it is pushing heavily – Boost Mobile and Gen Mobile.
How is the prepaid market evolving? Carriers will use the different positions of their various brands to go after segmented audiences, with Visible, for example, used to go after young, tech-savvy prospects. MVNOs will continue to launch and MobileX — recently launched by Boost Mobile founder Peter Adderton -— is proof of that. So far, competition has been fine. For example, Straight Talk offers more data than it did under TracFone. The advent of free phones at Walmart is another case in point. I hope competition continues to be robust.
Jeff Moore is Principal of Wave7 Research, a wireless research firm that covers U.S. postpaid, prepaid, and smartphone competition. Jeff has 25 years of telecom industry experience, including 13 years of competitive intelligence work for Sprint. Follow him on Twitter @wave7jeff.
Industry Voices are opinion columns written by outside contributors — often industry experts or analysts — who are invited to the conversation by Fierce Wireless staff. They do not necessarily represent the opinions of Fierce Wireless.