Sprint Seen ‘Pulling Away’ From Prepaid As AT&T, T-Mobile Battle

By | March 11, 2016

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Sprint ( S ) has “pulled away” from the prepaid segment of the wireless market, as AT&T and T-Mobile US ( TMUS ) slug it out in the segment, says Cowen & Co. AT&T ( T ) has gained share in the prepaid market with its “Cricket” brand, while T-Mobile continues to be successful with its “MetroPCS” brand, says Cowen in a research report, which rates T-Mobile stock outperform. Both AT&T and T-Mobile have stepped up their prepaid marketing . Prepaid subscribers traditionally bought calling minutes as needed and don’t have service contracts. But the marketing lines have blurred between the prepaid and postpaid segments as wireless firms phase out service contracts. Many prepaid plans renew automatically every month. Prepaid customers typically buy less-pricey phones upfront, and spend less on data services. “The balance of power (in prepaid) is shifting. In 2015, prepaid accounted for 29% of total (industry) net adds vs. just 12% in 2014, driven by strong growth at both Cricket (AT&T) and MetroPCS (T-Mobile),” Cowen analyst Colby Synesael said in the report. “Sprint has meaningfully pulled away from the market and has shifted its focus toward the postpaid (phone) market, and just recently began de-emphasizing its Virgin (prepaid) brand,” Synesael added. According to some industry reports , though, Sprint recently overhauled some of its prepaid plans. T-Mobile and AT&T both added 469,000 prepaid subscribers in Q4, while  Verizon Communications ( VZ ) shed 157,000 and Sprint lost 491,000. Some of Sprint’s prepaid subscribers upgraded to postpaid plans. T-Mobile acquired prepaid specialist MetroPCS in 2013 and has kept the brand alive. AT&T acquired Leap Wireless and its Cricket brand for $1.2 billion in 2014. Since then, AT&T has stepped up Cricket advertising while opening more retail stores. “The makeup of the prepaid market is shifting from a segmented low-end, pay-as-you-go service to higher-end monthly plans driven by solid device lineups that are riding on quality nationwide LTE networks,” said Synesael. Image provided by Shutterstock . Scalper1 News

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