Sprint & T-Mobile Post Record Low Post Paid Churn Rates

Advertisement
Advertisement

Days after regional carrier U.S. Cellular announced a record-low post paid churn rate of 1.20%, nationwide carriers like T-Mobile and Sprint joined the party as they announced their quarterly financial figures. Churn rate is calculated on the basis of number of post paid customers leaving their networks in a given period of time and both Sprint and T-Mobile have managed to keep their churn rates at 1.39% and 1.27% respectively, down from around 2.5% four years ago. While both carriers have given the credit for their low churn rates on their network improvements over the years, some analysts believe that the churn rate may climb up in the coming years regardless of how much carriers invest on improving their networks, while others believe that rocketing usage growth will continue to keep churn rates low in the coming years.

Interestingly, the trends at Verizon and AT&T are completely at odds with the ones at Sprint and T-Mobile as far as churn rates are concerned. While the latter carriers have had to labor around to bring down their respective churn rates, Verizon and AT&T have kept their churn rates stable at around 1% since 2012. Analysts at New Street Research feel that churn rates for both Verizon and AT&T may go up significantly after the new iPhone launch given that customer may go for the best available deals regardless of how big a carrier is. This will also allow Sprint and T-Mobile to expand their user base and create a level playing field in the long run. Both Verizon and AT&T have managed to keep their churn rates stable so far so it will be interesting to see how the indices turn out post the iPhone launch.

Among all the carriers, the most promising signs come from Sprint which added 180,000 post paid users in Q1, the highest in nine years despite stiff competition from larger carriers. The carrier also ported over the highest number of post paid users from rival carriers in five years and has netted $542 million from its operations in a single quarter, thus posing as a major claimant to the 2.5GHz equipment necessary to grow its network. However, the carrier has also suffered a net loss of $302 million in the period and even though the signs have been encouraging so far, it will have to put all its might to keep churn rates at less than 1.5% over the next few years while continuing to invest in improving its network.

Advertisement