One part of Verizon's wireless business appears to be struggling, as rivals AT&T and T-Mobile continue to build on their leads
- Verizon continues to struggle to retain prepaid wireless subscribers.
- The telco lost 176,000 prepaid subscribers in the first quarter of 2019, reporting its sixth consecutive quarter of customer losses on its prepaid business.
- Its inability to compete for consumers who want more choice in wireless services could be detrimental as service provider options increase over the next decade.
Verizon is floundering in its prepaid wireless business, as rivals around it continue to build on their lead over the telco behemoth.
Verizon lost 176,000 prepaid subscribers in the first quarter of 2019, reporting its sixth consecutive quarter of customer losses on its prepaid business.
"Verizon really continues to struggle in prepaid. They keep trying to reinvent themselves and nothing seems to be working as of yet," Wave7 Research telecom analyst, Jeffrey Moore, told Business Insider.
Verizon has experimented with various prepaid strategies over the past several years. It began selling prepaid mobile service through an independent dealers, or third-party workers who sell Verizon products, in 2016.
Last year, Verizon launched a separately branded cell phone service called Visible, its first direct-to-consumer cellphone business that sells prepaid service with no retail presence. It offers a low-priced, pay-as-you-go, single-tier plan and markets itself to a millennial audience. For $40 a month, you get unlimited data, talk, and text. Visible hasn't publicly shared subscriber figures.
Verizon's prepaid service, for comparison, costs $60 a month for unlimited service.
Overall, Verizon's prepaid subscriber base, at 4.5 million, is a fraction of its 113.4 million postpaid subscribers. But an inability to compete for consumers who want more choice in wireless services could be detrimental as service provider options increase over the next decade.
The mobile virtual network operator market, which licenses the network of a wireless carrier to offer their own service to customers, is growing fast. Its market size in 2018 was roughly $53 billion, and the industry is expected to grow 7.6% between 2018 and 2025, according to market research group Grand View Research.
These service providers, like Straight Talk Wireless which has about 25 million customers, typically target price-conscious customers and those who are savvy enough to monitor their data usage to take advantage of lower service prices.
Verizon's prepaid base has been slowly declining, losing more than 1 million prepaid subscribers over the past year and a half. It stands out in contrast to some of its peers that have been reporting excellent prepaid numbers, Moore said.
Verizon trails all of its biggest wireless carriers in the prepaid department. T-Mobile has more than 21 million subscribers, AT&T more than 17 million, and Sprint sits at about 9 million, though it too has had sub losses over the past few quarters.
For its part, Verizon has said its changed its strategy to focus on "high-value accounts and profitability" in its prepaid offerings.
And its prepaid subscriber losses may be slowing. The company improved on the magnitude of losses from a year ago, reporting 176,000 compared to 335,000 losses in the first quarter of 2018.