Verizon gaining ground in a prepaid market it once ignored

The prepaid market has become more competitive as growth of the overall wireless space has slowed. Image: 556 Ventures

Verizon shares climbed higher yesterday after the company’s wireless business posted third-quarter results that exceeded analyst’s expectations. And much of that traction was seen in a prepaid market the carrier once ignored.

“Prepaid net adds were 139,000 for the quarter with an increased focus on the smartphone value proposition,” Verizon CFO Matthew Ellis said during the carrier’s earnings call with analysts Thursday. “Additionally, we have recently expanded our offering to allow families the flexibility to combine different prepaid plans at a great value.”

Indeed, the nation’s largest carrier has begun to claw back market share in a segment it had ceded to its smaller rivals until recently. Former CFO Fran Shammo conceded last year that Verizon was “not really competitive in that (prepaid) environment” largely because the carrier feared losing lucrative postpaid customers to its prepaid business.

But Verizon added 19,000 prepaid customers in the second quarter of 2017 after losing 17,000 customers in the first three months of the year.

“Hat tip to #Verizon prepaid group—a phoenix out of ashes,” William Ho of 556 Ventures tweeted. “(Roughly) 4.85% of its overall retail base & sub levels back to 4Q15 levels.”

Verizon began to refocus on the prepaid market last year after bleeding customers to AT&T’s Cricket and T-Mobile’s MetroPCS brands. The carrier admittedly opted to view the MVNO TracFone as its de facto prepaid offering, which, crucially, sells service on all four major networks, not just Verizon’s.

Verizon launched an unlimited plan for prepaid customers in April, upping its effort to join the unlimited bandwagon that it had once eschewed. It lowered pricing and slightly increased the amount of data in each of its prepaid plans in June, making them more competitive with prepaid offerings from AT&T and other service providers.

And earlier this month Verizon launched a series of customizable prepaid family plans that enable users to choose a specific plan for each member on the account, creating individual access to monthly data buckets that aren’t shared. Like the carrier’s postpaid plans, the new prepaid service is priced at a slight premium compared to similar offerings from other carriers. But the launch clearly demonstrates Verizon’s eagerness to pursue a prepaid market that has become extremely competitive among U.S. carriers over the last 18 months.