MetroPCS beats subscriber expectations, says prepaid is back

Sprint isn’t the only prepaid entity that added a ton of subscribers in the first quarter. Yesterday MetroPCS reported their first quarter results, and they reflected better than expected growth. Analysts expected them to add around 422,000 subscribers, but they topped that by plenty, clocking 725,945 net adds. They had some other positive numbers to report, and at least one analyst opined on why they, along with Sprint, had such massive quarters.

“Today, MetroPCS made it clear that Sprint’s gain was not a matter of stealing market share, but rather a reflection of a pre-paid segment that has gotten its mojo back,” Bernstein Research analyst Craig Moffett said in a note.

The quote kind of confuses me, since I was unaware that prepaid once had mojo and then lost it, only to gain it back recently. The sector has been growing pretty consistently for the past three or four years, with the expected bumps in the road along the way. Maybe it slumped for a few quarters, but that was a symptom of the entire wireless industry, not prepaid specifically. But yes, prepaid does appear to have some swagger right now.

Two other numbers stood out from the report. First is churn rate, down to 3.1 percent from 3.7 percent in the first quarter of 2010. That’s excellent for prepaid, and it’s one reason that MetroPCS continues to grow at a pace equal to or better than its prepaid competitors. They also raised ARPU — average revenue per user — to $40.42, which is a 59-cent increase year-over-year. The focus on smartphones, certainly played a role in that. MetroPCS could see a further increase in ARPU throughout the year, as more and more customers pick up Android smartphones.

And now we wait to see what the other major players have done. It will be tough to top Sprint and MetroPCS.

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One Response

1. VidbiV Says
   

   I didn’t realize prepaid had gone anywhere?! If anything, the only company that should be asking “where has the prepaid gone”, is tracfone, who was the only prepaid mogul that didn’t live up to new addition expectations. This might very well be due to their lack of smarter phones, and the general trend that prepaid can accommodate smart phone options.
   Prepaid is no longer only for those that can barely afford milk, and bread.

   
   Posted on May 6th, 2011 at 4:51 am

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