Prepaid doesn’t always get as much attention as its arguably flashier counter segment, postpaid, but during a year that saw more than its share of changes across industries in the face of Covid-19, prepaid stepped into the wireless spotlight with a trio of deals.
At the start of 2020 Sprint had pulled the plug on its decaying Virgin Mobile prepaid service and transferred customers to Boost. Then in July, Dish Network sealed the deal for Boost Mobile and 9 million prepaid subscribers. Dish paid $1.4 billion to acquire Boost, an agreement related to approval of the T-Mobile/Sprint merger, although the process wasn’t without its hiccups.
It closed one month later than originally anticipated as negotiations with T-Mobile lingered, leading analysts to question what the holdup was about, be it purchase price or a related MVNO deal with T-Mobile. During that time reports surfaced that Boost Mobile was suffering the consequences and feeling the squeeze from a constrained handset inventory.
Of course, the parties eventually came to terms and Dish entered the prepaid wireless retail market, introducing new plans with better prices for customers that stay longer. Boost subscribers are riding on the T-Mobile network under a favorable seven-year MVNO agreement as Dish builds out its own nationwide 5G network.
Dish then added to its subscriber count with the purchase of Ting Mobile later in the summer. It decided to keep the Ting brand in place and at the end of November hired Robert Currie to lead Ting. As part of the deal, Dish received backend support for operations like billing, activation, provisioning and funnel marketing from former Ting parent Tucows.
Soon after, Stephen Stokols founder of FreedomPoP joined Dish to lead Boost Mobile’s sales, marketing, operations, and go-to-market strategy. In September he told Fierce that there’s an opportunity to jump into the prepaid fray, particularly with consolidation in the market.
“There’s really an opportunity to come in and be a disruptor,” Stokols said at the time.
That time happened to be right on the heels of another major shakeup for prepaid in 2020 – Verizon’s dive into the value segment.
Verizon dives into prepaid
This fall Verizon made a major push to get in on the prepaid action with plans to buy Tracfone from América Móvil.
Although the deal, valued at up to $6.9 billion isn’t done yet, it stands to add more than 21 million subscribers to Verizon’s base. Verizon historically put less emphasis on prepaid than its nationwide competitors, with a pool of about 4 million before the Tracfone announcement in September.
That compares to about 18 million for AT&T with its Cricket and other prepaid brands, 20.5 million for T-Mobile with Metro by T-Mobile, and 9 million for Dish’s Boost subscribers.
As Jeff Moore, principal of Wave7 Research wrote, “Verizon, the carrier that belittled prepaid not so long ago, will go from worst to first” with the Tracfone acquisition. According to Moore, Verizon had been “hemorrhaging prepaid customers” as of Q2, losing 1.7 million subscribers over the 11 previous quarters.
About 13 million Tracfone customers, across multiple brands, already ride on Verizon’s network. The remaining 7 million use competitors’ networks including AT&T and T-Mobile but will move to Verizon’s, meaning the former lose some wholesale revenues.
Verizon executives have said the Tracfone deal fits into Verizon’s continued ‘Network as a Service’ strategy. CEO Hans Vestberg said it’s also a good match because Verizon can consolidate offices, network, billing, customer innovation “and see the value segment gets the best of Verizon as well.”
It also could provide a new avenue for competing against T-Mobile.
“Taking the fight to T-Mobile in prepaid could be a new and interesting narrative for Verizon,” wrote LightShed Partners’ Walter Piecyk and Joe Galone in September.
Before the Tracfone deal, 2020 saw Verizon give a smaller push to its small, existing prepaid brands.
In June, Verizon introduced savings rewards for new Verizon-branded prepaid customers to incentivize them to stay with the carrier. The next month, the Verizon-backed all-digital prepaid brand Visible launched its first TV campaign in a major advertising blitz. And earlier in the year, Verizon Media introduced Yahoo Mobile, which debuted its own purpose-built ZTE phone at the end of October.
It’s unclear how much of a following Visible and Yahoo Mobile brands have generated as Verizon hasn’t released subscriber counts.
Consumer Cellular sold to PE firm
Another change for prepaid in 2020 came in October when Portland-based Consumer Cellular agreed to sell a controlling stake in the MVNO to private equity firm GTCR.
The business, which targets the 50+ demographic, garnered a lot of attention with a bidding war reportedly involving familiar names like Dish and Altice USA.
“We were super excited about the amount of interest in the company,” co-founder John Marick told FierceWireless at the time, without naming names.
Wave7’s Jeff Moore referred to Consumer Cellular as the “poster child” for MVNOs, saying many that have launched over the past 20 years didn’t last.
Existing shareholders of the 25-year-old company are to retain a “significant” minority position.