While the ongoing coronavirus pandemic is impacting most every industry, prepaid wireless brands aren’t getting hit quite as hard as postpaid, according to Wave7 Research.
“The pandemic’s impact to prepaid sales has been surprisingly small,” Wave7 wrote in its latest prepaid competition report. It noted that while there’s still been a negative impact on activations, it’s not as bad as would be expected and comparatively better than postpaid impact.
This partly is simply a function of more prepaid stores remaining open, though many are operating at reduced hours, Jeff Moore, principal at Wave7, told FierceWireless.
“You can confidently say postpaid activations are down significantly more than prepaid activations,” he said.
Looking at Boost Mobile, Cricket Wireless, Metro by T-Mobile and Total Wireless, Wave7 estimates that collectively as of April 8, 73% of prepaid stores were still open.
That compares to about 46% postpaid wireless retail stores that remained opened at the end of March, according to Wave7. AT&T, Sprint, T-Mobile and Verizon all closed thousands of company-owned stores last month as stay-at-home orders and social distancing guidelines were put in place in efforts to battle the COVID-19 outbreak. Those announcements don't apply to the large number of branded retail stores run by independent dealers, which have their own to decision to stay open or closed.
Boost, which is slated to be transitioned off to Dish Network and start initially riding on T-Mobile’s network, has roughly 10% of stores closed, according to the report, though Moore categorized that as a ballpark figure. Separately, with the economic fallout from the coronavirus crisis, some have questioned whether Dish will be able to follow through with its plans to build a national wireless network and successfully takeover the Boost brand. Still others, like New Street Research analysts, say a shift to prepaid from consumers looking to save money will help Dish’s business.
As for store closures, Wave7 estimates about 25% of retail locations for T-Mobile’s Metro are temporarily shuttered, while around half of Cricket (AT&T’s prepaid brand) stores remain open.
Non-exclusive dealers, which sell more than one prepaid brand, weren’t included in the Wave7 figures.
Last week the National Wireless Independent Dealer Association (NWIDA) confirmed from multiple sources that Metro by T-Mobile gave 120-day termination notices to non-exclusive dealers, though some might get the opportunity to sell Metro exclusively. T-Mobile didn’t comment, but NWIDA indicated between 250 and 750 stores were impacted.
While traffic at prepaid stores has been down, conversion appears to be higher, according to the Wave7.
Stimulus checks could provide a bump
Prepaid could also see a boost as the U.S. government starts to dole out stimulus checks to millions of Americans in an effort to ease financial strain caused by the pandemic and resulting steep job cuts.
Moore said he thinks stimulus checks are going to be “a big factor” for prepaid. This is in parallel to a trend seen in tax season, where customers tend to go out and spend more money on phones once they’ve received a tax refund, he explained, adding that this tends to impact prepaid more than postpaid.
“I think we’re going to see that impact again when stimulus checks start arriving,” he said. “People will start showing up to their Boost, Cricket or Metro store and spending a lot of money.”