T-Mobile US CFO Braxton Carter (pictured) revealed the operator traced a significant dip in its Q4 2017 prepaid subscriber growth to a mobile device promotion run by rival AT&T during the period.
Speaking at an investor conference, Carter noted T-Mobile recorded a “very significant decrease” in prepaid growth from Q3 to Q4, with net additions falling from 226,000 to 149,000. By contrast, post pay net additions grew from 595,000 to 891,000 sequentially.
The post paid figure was relatively stable year-on-year, but the prepaid number fell from 541,000 net additions in Q4 2016.
Carter said T-Mobile was initially baffled by the dip, but eventually concluded it was the result of a new strategy put in place by AT&T focused on localised bring-your-own-device (BYOD) campaigns to woo switchers (referring to the practice of encouraging users to keep their existing handset while changing service provider).
The CFO called AT&T’s play “very smart” since it required no handset investment and added an immediate revenue stream for the company. Its effectiveness, he noted, was rooted in the fact BYOD customers were subject to different credit standards than customers seeking to switch and finance a device.
“They view credit very differently with BYOD because there is, quite frankly, a lot more credit exposure when you’re financing a device to a consumer. And when you look at the service revenue component, they weren’t really concerned about the service revenue exposure. So what we were able deduce is a lot of prepaid flow with that new emphasis by AT&T is actually showing up and being reported as post paid [growth for AT&T].”
In Q4, AT&T posted 329,000 post paid net subscriber additions, marking a stark turnaround from at least four straight quarters of losses, including losses of 67,000 in Q4 2016.
Now, though, Carter said porting ratios have swung back in T-Mobile’s favour. The operator’s overall porting ratio (the number of subscribers it gains for every subscriber loss) so far in Q1 2018 stands at “well over” 1.7. Specifically, Carter noted porting ratios against AT&T and Verizon have both increased, while ratios against Sprint have remained stable.
Talk of a merger with Sprint also resurfaced during the conference, as Carter and T-Mobile CTO Neville Ray pointed out network-driven synergies from a potential tie up still exist.
Carter reiterated a deal with Sprint would have put its growth trajectory “on steroids”. He added “the prize is still there” for the taking if the companies can get past their differences on price and control of the combined entity.