Friday, October 5, 2012

Can T-Mobile Climb to 3rd Spot on Strength of Prepaid?

The logic behind theT-Mobile USA  MetroPCS deal is that the combined firm will be able to climb the market share rankings on the strength of demand for prepaid services, sold without contract, on a "value" platform, with a skew towards younger users.

Historically, one might have viewed that strategy skeptically, given the lower average revenue per user prepaid accounts represent. That is one reason the market leaders have tried to avoid encouraging users to buy prepaid services, in place of postpaid. 

At the same time, T-Mobile USA has said it will emphasize the wholesale segment more heavily, something that is the mainstay for Clearwire and a significant business for Sprint. 

Of course, on one hand, you can argue the potential for prepaid in the United States is quite high, given prevailing adoption in many other countries, where prepaid is dominant. Some also argue that tough economic conditions will drive more people away from postpaid, and towards prepaid. 



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