T-Mobile US and Sprint Might be Taking Share Mostly from Prepaid Customer Segment

Sprint's most recent quarter provides yet one more data point about mobile market share and the impact of marketing wars. Though there is some evidence of lower average revenue per account, at AT&T and Verizon, there is nothing dramatic. Churn rates haven’t changed noticeably. Subscriber net additions remain stable.

T-Mobile US continues to add postpaid accounts at a rapid clip, but there again, it does not seem that net additions are coming at the expense of AT&T or Verizon. Tablet account additions might explain some of the net additions data. You might well argue that, were it not for tablet account additions, AT&T and Verizon’s net adds would look worse.

Sprint’s results offer a plausible explanation for what we see. Sprint lost a net 201,000 postpaid phone accounts during the quarter. Yet Sprint reported a net gain of 211,000 postpaid accounts, so one has to assume most of those were tablets.

Perhaps the clue is that Sprint’s net additions were heavy in the prepaid category.

Sprint reported adding a net 546,000 prepaid phone, and 349,000 net prepaid tablet accounts.

T-Mobile US, in its most-recent quarter, added 991,000 postpaid phone customers and 134,000 postpaid mobile broadband customers. Since neither AT&T nor Verizon seem to be especially challenged in the postpaid account area, one might suggest the customers are coming from the prepaid segment, including prepaid accounts that became postpaid accounts, and prepaid accounts that switched to branded T-Mobile US postpaid accounts.

T-Mobile added 73,000 branded prepaid customers quarter, as well as 620,000 wholesale customers in the period, including 479,000 mobile virtual network operator  customers and 141,000 M2M connections.

So maybe T-Mobile US and Sprint mostly are eroding market share of prepaid providers, as prices dip towards levels prepaid customers had been used to paying.

Aside from raising the possibility that U.S. mobile market share is being more concentrated among the “big four” mobile carriers, the danger is that Sprint and T-Mobile US are spending lots of marketing effort and money to increase their share of prepaid customers.

In one sense that is helpful. In another sense, though T-Mobile US is gaining postpaid market share, Sprint might still be slipping.