T-Mobile is learning the ropes when it comes to the prepaid industry. The sad fact is, it may be hurting their (much more profitable) postpaid side of the ledger. The latest numbers show a much greater leap in customers with prepaid than postpaid. With the economy the way it is, no huge shock there…the same thing happened the last two quarters.
This quarter though, the disparity of prepaid vs postpaid was even greater. 60% of their new customers in Q1 2009 were prepaid (415,000 total new additions this quarter, so the numbers weren’t as high as they would like, so it stings a little more).
So the question is: does T-Mobile believe in the prepaid cell phones business, or should they resist moving too far into this sector? Analysts believe they should embrace the prepaid model, as long as its working:
“We believe T-Mobile will have no choice but to match the new $50 level going forward – being priced twice as high as the market is not a viable strategy,” Moffett said in a research note. “And when that happens, the competitive dynamic of the unlimited pre-paid segment will be exactly where it was a few quarters ago … but with a lower price point. Whatever momentum Sprint has gained as a result of its Boost Unlimited offering will become much more challenging to maintain beyond that point.”
MetroPCS and Cricket Wireless offer their top prepaid plans at $50, so odds are T-Mobile will have to do the same to compete. Virgin Mobile joined the $50 parade too recently. It’ll be interesting to see how this race shakes out, given the price points being the same.
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