Cut-rate MVNO TracFone is attracting a strong number of subscribers to its low-cost prepaid service plan. The company, a unit of América Móvil, added 780,000 new subscribers in the first quarter, bringing its total subscriber base to 18.5 million--an increase of 19.9 percent in the period. However, the number of its new subscriber additions is down slightly from the previous year's quarter, when TracFone reported adding 1 million subscribers.
Nevertheless, the company's revenues are increasing. TracFone reported revenues of $868 million, up 43.4 percent from a year ago. It also reported that its average revenue per user increased 27.8 percent to $14 per month. The company's minutes of use also increased 131 percent over the previous year to 354 minutes per subscriber.
The company's EBITDA was $63 million, down from $77 million in the year-earlier quarter. TracFone's EBITDA margins also decreased to 7.3 percent from 12.7 percent.
TracFone is facing increasing competition from traditional operators. Last week Verizon Wireless (NYSE:VZ) launched a major new service dubbed "Verizon Unleashed," which offers prepaid unlimited wireless calling, texting and data for $50 per month. The service is a direct attack on MVNOs like TracFone. However, Verizon's plan is currently only available in Southern California and parts of Florida.
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