Verizon Communications Inc. is a multinational telecommunications company based in the United States and T-Mobile US Inc. (T-Mobile) is a subsidiary of Deutsche Telekom AG.
T-Mobile surpasses Verizon as largest prepaid carrier
Their third quarter 2023 financial reports show that T-Mobile and Verizon have 21,595,000 and 21,420,000 customers, respectively. AT&T reported 19,391,000 prepaid customers.
Wave7 Research noted the recent change in a prepaid report sent to customers this week. After overtaking Verizon, T-Mobile has more prepaid users than any other carrier.
Verizon was the largest prepaid provider in the United States before the third quarter, but the stock was relatively new. After purchasing TracFone Wireless from América Móvil in 2021, the operator immediately gained over 20 million prepaid users.
But since then, the company has been gradually losing customers.
Verizon last saw single-quarter growth in prepaid services in the third quarter of 2022, when it added 39,000 lines, as highlighted by BestMVNO. It has lost more than two million customers since acquiring TracFone.
At the time of the acquisition, TracFone was the largest MVNO in the United States. The majority of TracFone’s customers were already on the Verizon network; thus, some losses may be attributable to users who preferred to stay on the T-Mobile or AT&T network rather than switch.
An attempt at comment from Verizon was unsuccessful. T-Mobile, however, acknowledged that it outperformed Verizon’s prepaid services thanks to its stable performance.
Now let’s explore Verizon’s postpaid history! According to 556 Ventures analyst Bill Ho, who tracks Verizon’s quarterly prepaid performance, the company has historically focused almost entirely on postpaid, which makes sense given that average revenue per user or account (ARPU/ARPA ) higher is gained.
Still, it made sense for Verizon to reassess its position on prepaid and jump in head first when postpaid growth slowed.
According to Ho, Verizon may have contributed to some prepaid losses by deliberately allowing low ARPU customers to leave to improve their bottom line.
On Monday, during their third-quarter earnings call, Dish Network officials addressed this topic. They explained that choosing to be more selective in attracting and retaining profitable customers is one aspect of their business strategy.
While people who pay in advance and don’t need a credit check are generally considered prepaid customers, the distinction between prepaid and postpaid consumers has become blurrier over time.
Ho said T-Mobile has reclassified some prepaid customers to postpaid, which improves postpaid growth. T-Mobile officials have been discussing this change for some time.
Had these reclassifications not occurred, T-Mobile would have overtaken Verizon in total prepaid users much sooner.
If T-Mobile’s proposed acquisition of Mint Mobile and Ultra Mobile is approved, it will add nearly 2 million new prepaid users to its roster.
The FCC has asked T-Mobile to respond by November 29 on various topics, including public benefits and distribution plans, while the U.S. government is currently reviewing the deal.
In the third quarter, Verizon’s prepaid churn rate was 4.39%. While prepaid churn is around 3% for AT&T and T-Mobile, according to Ho, the latter understands its prepaid base better. He added: “They know which levers to pull. »
T-Mobile purchased MetroPCS in 2013, and AT&T purchased Cricket Wireless in 2014. With its Total by Verizon brand, Verizon is only beginning to set up stores in metro areas across the country, something Cricket and MetroPCS have already done.
He said that from now on, he will monitor whether Verizon improves its prepaid business. But he added: “I wonder if they will see enough growth to make up for their losses,” he added. “From an integration point of view, this doesn’t seem like a good acquisition. »
Hans Vestberg, CEO of Verizon, has discussed the company’s progress with the TracFone integration during previous earnings calls.
He mentioned expanding Verizon’s retail footprint and working with national retailers to bolster its products during the third-quarter call, emphasizing the importance of prepaid users to the company’s overall strategy.
Verizon is working to support its prepaid business, with Straight Talk offering discounts on family plans and including comedian and actor Jim Gaffigan in Straight Talk commercials. Visible is putting a lot of effort into becoming a successful fully digital prepaid provider.
Additionally, hundreds of new Total by Verizon locations are opening across the country. Verizon Value President Angie Klein discussed the 11 different prepaid brands offered by Verizon and their different roles in an interview with Fierce last month.
Angie Klein said: “We believe we can do this better and provide better, more premium solutions than some of our competitors are offering to this segment, so we are looking to take them head on. »
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