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Postpaid churn is at an all time low


As the second-quarter earnings season comes to a close, industry analysts are sifting through the results to discern where the wireless industry is headed. And one prominent statistic to emerge from this quarterly analysis are carriers’ noteworthy improvements in retaining customers – although some analysts believe this situation won’t last long.

According to a pair of new financial reports, industry churn (a measurement of how many customers are discontinuing service at their carrier) is at a record low, largely due to improvements at T-Mobile and Sprint. Indeed, both carriers have been working to improve their networks and their offerings in order to attract and retain customers, and that effort appears to have played out based on their respective second-quarter earnings reports: T-Mobile reported “record-low” branded postpaid phone churn of 1.27 percent, while Sprint notched its “lowest postpaid phone churn in company history” at 1.39 percent.

“It is interesting that S and TMUS both saw material decreases in postpaid churn to below their historical levels,” analysts at Evercore noted in a research note. “Importantly, while S is touting its network as the main reason for its improvement in churn, it does not appear that S is investing enough in the long-run to keep its subs. As such, we point instead to the current environment for the reduction in churn.”

Added the analysts at New Street Research in their own recent report: “Postpaid handset churn has come down 12bps since 1Q13, with the entirety of this decrease attributable to declines at the challengers, Sprint and TMUS. Indeed, incumbent churn has been flat over the same period, compared to a 58bps decline at the challengers. We expect this convergence of churn trends to continue as the incumbents lose their historical network advantage amid an onslaught of usage growth.”

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#Sprint #Tmobile #ATT #Verizon #Postpaid #Churn

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