How Did The Prepaid And Wholesale Businesses Of U.S. Carriers Fare During Q2?

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The prepaid wireless market looks increasingly attractive to U.S. wireless carriers, as prepaid plans shift to monthly billing cycles, while the gap between prepaid and postpaid ARPUs also narrows. However, the performance of the prepaid segments of the nationwide U.S. wireless carriers remained mixed during Q2 2016, amid mounting competition, churn and sequentially lower subscriber additions.  The total prepaid net adds of the big four carriers – AT&T, Verizon, T-Mobile and Sprint stood at 480k, marking a decline of about 45% sequentially. Below we provide the key takeaways from the performance of the prepaid and wholesale segments of the major U.S. carriers.

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  • T-Mobile strengthened its position in the prepaid space, adding around 476k new subscribers, driven by promotional activity around its MetroPCS brand and expansion into new markets, while AT&T also added about 365k subscribers driven by its Cricket brand. Sprint – the second largest prepaid player – has been underperforming amid mounting competition and also due to its own de-emphasis on the less lucrative pay-as-you-go segment. Verizon has also been letting go of prepaid subscribers as it focuses on postpaid, which accounts for about 95% of its customers.
  • AT&T’s wholesale and connected device net adds remained the strongest in the industry, as connected device net additions (1.2 million) helped to offset a decline in its reseller connections. Wholesale connections can see some volatility, as MVNOs often have relationships with multiple carriers with the ability to steer business towards carriers that offer the best pricing. Sprint and T-Mobile also saw reasonably strong adds, on account of connected device additions.
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