A new report is casting shadows over one of AT&T’s Cricket distribution channels, noting that video game retailer GameStop appears to have slowed or stopped sales of Cricket prepaid wireless services in stores across the country.
“Cricket’s relationship with GameStop has ended, reps are saying. Missouri, Kansas, California, and Florida reps said that it ended in late January and that phones were shipped back to Cricket,” wrote Wave7 Research in a recent note to subscribers. The firm carefully tracks wireless carrier sales across the country.
An AT&T spokesperson declined to comment on the report, noting the operator doesn’t comment on its retail relationships. A GameStop representative did not respond to questions on the topic.
AT&T in 2014 announced its deal with GameStop to sell Cricket-branded prepaid wireless services in 2,800 of the video game retailer's U.S. store locations. And the companies in 2016 said that agreement had expanded to 3,400 GameStop locations in the U.S.
However, GameStop in recent months has issued several troubling announcements. Last year the company shuttered 150 stores. And last month it reported impairment charges of between $350 million to $400 million, which the company attributed to wireless customers holding onto smartphones longer and not upgrading to new models.
Through its Spring Mobile brand, GameStop also owns more than 1,400 branded AT&T stores, which CNBC noted makes it AT&T’s largest retail partner. In its recent filing with the Securities and Exchange Commission, the company also noted it operates Cricket-branded wireless stores.
And just today, GameStop said its CEO Paul Raines has resigned to focus on his health after “a medical reoccurrence” of a brain tumor.
In the fourth quarter, AT&T reported the net addition of 140,000 prepaid customers, roughly half of what analysts had expected for the quarter. That figure, however, stretches across Cricket and AT&T’s relatively new AT&T Prepaid brand.
That’s also noteworthy considering the wireless industry’s movement in general during the fourth quarter away from prepaid.
"Industry prepaid adds were at their lowest levels in nearly three years, thus we estimate total industry phone adds were up just 6% Y/Y, implying an unusually outsized prepaid to postpaid migration," the analysts at Cowen and Company wrote.
"Whether this dynamic will continue and what exactly drove it is unclear, although it could either be more attractive postpaid plans or the bullish macro environment."