Postpaid, prepaid mix continues diverse for domestic carriers during first quarter

The first three months of the year showed an interesting pecking order among the nation’s largest wireless operators.
While its position as the nation’s largest operator is threatened by the impending AT&T Inc. (T) acquisition of T-Mobile USA Inc. (DTEGY), Verizon Wireless (VZ) continues to stake its claim as the destination of choice for wireless consumers looking for a long-term commitment. Verizon Wireless managed to sign up 906,000 postpaid customers during the quarter, easily outpacing the combined results of all of its rivals.
The carrier has long maintained a focus on lucrative postpaid customers, constantly acknowledging its focus on that market segment. That focus was helped during the first quarter with the launch of Apple Inc.’s iconic iPhone 4 device, which attracted 500,000 new customers to the carrier, or more than half of its postpaid net additions.
Amongst the remaining three nationwide operators only AT&T Mobility was able to attract more postpaid customers than it lost during the quarter. The carrier said it added 62,000 postpaid customers, a majority of which were attracted by the carrier offering aggressive pricing on the iPhone 3GS model prior to Verizon Wireless offering the 4 version in February.
The smaller of the nationwide operators, Sprint Nextel Corp. (S) and T-Mobile USA, both lost contract customers during the quarter with Sprint Nextel losing 114,000 subscribers and T-Mobile USA losing a whopping 471,000 contract customers.
For Sprint Nextel the postpaid losses continue to come from its iDEN-based services that hemorrhaged 424,000 subscribers during the quarter that offset a net gain of 310,000 postpaid customers for its CDMA-based services.
At T-Mobile USA, the postpaid losses were most dramatic from its convention voice offerings which actually lost 663,000 customers as it managed to add 192,000 contract customers through data-centric connected devices.
Prepaid continues strong growth
On the prepaid side, customers continue to flock to no-contract offerings from a more diverse selection of carriers.
Sprint Nextel managed to lead the industry in attracting prepaid customers, adding 846,000 direct prepaid net additions during the quarter. Those customers signed up to one of the carrier’s bevy of prepaid services, including Boost Mobile, Virgin Mobile USA, the recently discontinued Common Cents brand and its Assurance Wireless service.
Sprint Nextel also managed to post net gains across its affiliates and wholesale partners, which attracted 389,000 customers during the quarter. Customers signing up through those segments are a mix of prepaid and postpaid, numbers that Sprint Nextel does not break out.
Perhaps more surprising in the prepaid space was the strong showing by MetroPCS Communications Inc. (PCS), which despite a much smaller footprint than its nationwide rivals, managed to attract 724,945 prepaid customers during the quarter. This result nearly matched the combined results of the remaining larger players in the space.
Among the other players, T-Mobile USA showed that it was still an attractive destination for prepaid customers as it reported 372,000 prepaid net additions through both its branded service as well as its wholesale partners. Those partners include the recently launched Family Mobile offering through Walmart Stores Inc.
Leap Wireless International Inc. (LEAP) also continues to show that it can compete against larger rivals in the prepaid space posting 331,000 net customer additions during the quarter. One challenge for Leap continues to be the ongoing comparison between its Cricket operation and that of MetroPCS, which offer similar unlimited services for a flat rate. Despite offering services in more markets, Leap continues to trail customer growth posted by MetroPCS.
Big players continue prepaid struggle
The prepaid space continues to be a struggle for the nation’s two largest operators as Verizon Wireless lost 27,000 direct prepaid customers during the quarter. Verizon Wireless does appear to be taking a more serious, though targeted, approach to the segment having recently begun rolling out an unlimited prepaid service in select markets.
The carrier continues to show more traction from its wholesale partners, many of which offer prepaid services running on Verizon Wireless’ network, as well as its connected device segment that also relies to an extent on no-contract offerings. Those two segments managed to attract 897,000 net additions during the quarter.
AT&T Mobility witnessed a similar outcome as its branded GoPhone prepaid service added a lackluster 85,000 customers during the quarter, which was handily outpaced by the 561,000 customers added through prepaid wholesalers. The carrier also showed strong growth from the connected device crowd with 1.3 million net additions during the quarter coming from that rapidly growing segment, which was the main segment driver for the carrier during the quarter.
This hands-off approach to the prepaid market has allowed both operators to distance themselves to an extent from the negative aspects that continue to still haunt the prepaid space, including higher customer churn and lower average per user. However, rivals have begun to see both of those metrics improve across the space as customers appear to becoming more comfortable with consistent prepaid services.