Prepaid consumers are something of an afterthought to some wireless carriers increasingly trying to poach lucrative postpaid users from their competitors. But T-Mobile has actually increased its focus on that segment, as evidenced by the record 807,000 net prepaid customer additions it scored during the first quarter.
T-Mobile reported an eleven-fold year-over-year increase in branded prepaid net customer adds, and 72 percent sequential growth driven by its MetroPCS business. T-Mobile's branded prepaid churn was 3.84 percent during the first quarter, down from 4.62 percent during the prior year and 4.2 percent in the fourth quarter of 2015.
Perhaps the most compelling statistic regarding MetroPCS in the first quarter, though, it its ARPU.
"This is one of the little golden nuggets in this set of earnings," CEO John Legere told analysts on the carrier's earnings call. "ARPU at MetroPCS is $38, $39 each, so this is a very steady, very good ARPU."
Legere also contrasted prepaid revenues with devices from the IoT, which is a segment T-Mobile's larger competitors like AT&T have pursued more aggressively. "I think what we need people to start understanding is that some of these adds -- these connected cars -- these are cents (per month), not dollars."
T-Mobile continues to chase the prepaid market aggressively on the retail level, too, mirroring the strategy it has leveraged to grow its postpaid business. MetroPCS has 7,500 "dedicated doors" -- retail locations, Legere said, and 1,000 more are on the way this year.
That strategy is markedly different than, say, Verizon's, which views TracFone -- a discount MVNO operated by Mexico's América Móvil that offers service through every major U.S. carrier -- as its own prepaid offering. The nation's largest carrier said recently it doesn't pursue prepaid users aggressively, partly out of fear of cannibalizing its postpaid revenues. Verizon lost 177,000 net retail prepaid users in the first quarter, which actually marked a slight improvement compared to the 188,000 it lost during the same period last year.
AT&T, meanwhile, continues to operate its Cricket brand while the parent company focuses on lucrative postpaid users. AT&T reports its first quarter earnings this afternoon.
And Sprint users have become a primary target for T-Mobile's prepaid services, Legere said.
"Historically, our way to compete with Sprint is via MetroPCS; we are very much targeting Sprint users with MetroPCS offers," Legere continued. "What I'm most excited about is that these numbers... (and) the financials are very, very strong."
Sprint is scheduled to report its first-quarter earnings next week.
- listen to T-Mobile's earnings call
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