As cable companies push into the mobile industry with large growth, T-Mobile remains unconcerned with overall attrition to cable competitors and reported large overall growth and small, but significant, prepaid growth. The Motley Fool’s Adam Levy provides a rundown of T-Mobile’s earnings and subscriber growth:
“The carrier added 927,000 postpaid phone subscribers in the fourth quarter and eked out an additional 25,000 prepaid subscriber additions… (T-Mobile CFO Peter) Osvaldik suggested a lot of the growth at Comcast and Charter is coming from customers switching from prepaid plans to postpaid plans. He also called out Verizon as a major contributor to cable’s wireless subscribers. Indeed, Verizon lost 175,000 prepaid subscribers in the fourth quarter, and it struggled to add phone subscribers throughout 2022.”
T-Mobile’s results support Javelin’s predictions of slow and steady growth overall for prepaid services. Javelin predicts a CAGR of slightly more than 1% from 2023-2026 in prepaid minute and data revenue. Verizon, even with its losses this year, should continue to have a slight lead on subscribers over T-Mobile and AT&T.
T-Mobile believes that cable’s high use of promotional tools to lure customers creates an unsustainable model and appeals more to prepaid consumers. This makes sense as consumers who rely on prepaid phone plans are more likely to come from underserved and underbanked communities. These customers could be enticed by large scale promotions presenting free or discounted wireless service when linked to bundled cable and broadband services.
The continued development of Fixed Wireless Access, still in its infancy, lends credence to T-Mobile’s long-term stance. As I covered in my December 2022 report, “Prepaid Mobile Expanding Its Use Case in a 5G World,” the future marketplace may see a shift from wired to wireless. The advent of high-speed 5G networks creates an ecosystem that can support a market shift from simple voice and data connectivity through mobile devices to a full array of internet services, free from the built-in infrastructure of wired services. The marketplace is already starting to see some shift into these areas, although cable companies are spending heavily on commercials to push the message that FWA signals degrade easily with additional wireless traffic.
As the marketplace develops, prepaid FWA could help wireless providers reverse trends of low switching costs and I fact could use FWA to bolster prepaid opportunity, especially with government aid from the Affordable Connectivity Program. The program reduces hardware barriers to entry and extends offers of stipends of up to $30 a month for qualifying internet service. This program, is ideally suited to help consumers attracted to prepaid programs.
Overview by Jordan Hirschfield, Director of the Prepaid Advisory Service at Javelin Strategy and Research.