media logos

Prepaid continues to fuel Sprint’s growth

Sprint recently announced its first quarter results, and while there was plenty on the report, the main takeaway is that prepaid continues to fuel the company’s growth. Specifically, CDMA prepaid is growing at a rapid rate, with 1.4 million net adds in the first quarter of 2011. That includes its two major brands, Boost Mobile and Virgin Mobile, plus Common Cents, though the latter has since been discontinued. Many of those adds, though, were people moving over from iDEN, which lost 560,000 subscribers, leaving the net prepaid growth at 846,000, which constitutes 77 percent of Sprint’s total adds for the quarter. They also added 389,000 wholesale and affiliate subscribers.

This has been a big move for Sprint, as the company had been losing subscribers at this point last year. The Virgin Mobile deal was made official around that time, though, and that seems to have been a big part of the turnaround. Left to only direct postpaid sales Sprint still lost subscribers, though not nearly as deeply as they had a year ago. But with prepaid they continue to grow.

Part of the solution has come from reducing churn. Prepaid churn during the period was 4.36 percent, which is a steep decline from the 5.74 percent in the first quarter of 2010, and even a drop from the 4.93 percent from the fourth quarter of 2010. Churn is always an issue in the prepaid space, and the ability to cut it can make a huge difference in numbers. Boost, apparently, help keep the churn number low, as its $50 unlimited plan tends to keep customers around. Virgin, however, did reduce its churn as well.

The question, of course, is of how much greater Sprint’s prepaid arms can grow. They’re a big part of the company’s success, and they’ll be a big part of its continued recovery. We might see some changes in the next few quarters to help continue that growth.