How Did The Prepaid And Wholesale Businesses Of Nationwide Carriers Trend In Q3?

The prepaid wireless market has been looking relatively attractive to U.S. carriers, on account of growing attach rates of data plans, which is helping to bolster ARPUs and also due to an increasing shift to monthly billing cycles. The wholesale business has also been improving, amid higher connected device additions. Below we provide the key takeaways from the performance of the prepaid and wholesale segments of the nationwide U.S. wireless carriers over the third quarter of 2016.

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Sprint’s prepaid business lost a total of 427k subscribers during the quarter (compared to 188k losses in Q3’15) on account of stronger competition as well as its own de-emphasis on the pay-as-you-go segment, which is less lucrative from an ARPU and churn standpoint. T-Mobile performed well during the quarter, adding a total of 684k subscribers, driven by a strong performance of its MetroPCS brand and expansion into new markets. The carrier’s prepaid ARPUs have also been expanding (up 1.5% year-over-year to $38), driven by higher data attach rates and attrition of lower value users. While AT&T added a total of 325k prepaid subscribers during the quarter, its growth rate slowed down on a year-over-year basis on account of a network outage. Verizon posted a small gain in prepaid customers during this quarter, after six straight quarters of prepaid customer losses, driven by the introduction of new prepaid pricing plans. That said, the carrier’s focus is likely to remain on the postpaid front, as postpaid subscribers account for roughly 95% of its overall base.

AT&T’s wholesale net adds remained the strongest in the industry, as connected device net additions (1.33 million) helped to more than offset a decline in re-seller connections (315k reseller losses). The carrier intends to shut down its 2G network by the end of this year, causing a large number of MVNO customers to disconnect. Sprint also benefited from strong connected device additions, although its overall net adds saw a slight decline on a year-over-year basis. T-Mobile’s wholesale net adds declined by roughly 50% year-over-year to 317k.

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