TracFone

TracFone Sees Lower Growth In Q4 2014 Due To Increased Competition From Bigger Players

February 12, 2015 - Written By Justin Diaz

TracFone has been around for quite some time, offering up some of the lowest rates available for wireless cell service that a customer could possibly buy. Having the lowest prices isn’t necessarily going to guarantee you continued growth and success. According to the latest reports TracFone has been feeling pressure from the increased competition from the nations biggest players in the wireless industry which resulted in them seeing a fairly low amount of growth in the fourth quarter of 2014, grabbing up only 101,000 new subscribers. This number of new customers is even lower than they posted in the fourth quarter of 2013 which has caused some to be concerned.

TracFone also posted a higher churn in the fourth quarter of last year compared to the year prior in 2013, having boosted churn rates of 4.2 percent, which was only 3.6 percent the year before. Although growth for TracFone Wireless seems to be slowing down than in recent years, they still managed to post some growth last year moving up from around 25.9 million subscribers to about 26 million. Slowing growth is definitely nothing to take lightly but it’s still better than no growth at all, or even worse, posting losses. Nonetheless, TracFone slowed down quite a bit as Q4 2013 saw them post a gain of around 616,000 new subscribers which is a huge margin compared to this past year

TracFone operates a number of different smaller branded networks, borrowing coverage from the larger carriers like T-Mobile, Sprint, Verizon Wireless and AT&T, spanning across services like Net10, Simple Mobile, Straight Talk, Telcel America, SafeLink, and Page Plus. In addition to TracFone’s lower subscriber growth this past quarter, it also posted a EBITDA of $72 million down from $119 million the previous year. This is also alongside the $40 million it had to shell out to the Federal Trade Commission(FTC) over bogus advertising that customers were receiving unlimited data services, when in fact customers were getting throttled with some even getting their data usage cut off after they had crossed a certain point of usage, although TracFone isn’t the only network where customers are complaining about the branding of unlimited data that isn’t actually unlimited. TracFone’s slower growth can also be attributed to the increased competition in Mexico(their main market)that its parent company American Movil is getting from AT&T who has recently purchased Lusacell and plans to acquire Nextel Mexico.