Light Readingreports that the US prepaid market has bounced back after a prolonged lull. AT&T, T-Mobile, and Verizon appear to be the biggest beneficiaries.
Prepaid plans require you to pay for services in advance. Postpaid customers, on the other hand, pay for services at the end of a billing cycle. Prepaid plans give customers greater control over spending and unlike postpaid plans, they don’t leave room for overspending. Generally, consumers who want to save money opt for prepaid plans, which is why they aren’t considered as lucrative as postpaid customers.The US prepaid market returned to growth in the first quarter of the year for the first time since Q3 2022.
Verizon gained 137,000 prepaid customers in Q1 and the company expects positive results in the second half of the year as well. Verizon can finally breathe a sigh of relief that it made the right call by purchasing prepaid provider TracFone in 2021. The acquisition earned the company a market share of 33 percent, making it the biggest player in prepaid. This was the first quarter when it saw robust growth.
Our momentum continued to build in core prepaid where we delivered 137,000 net [customer] adds. Our strong execution and investment … is paying off, and we continue to expect positive service revenue contribution from core prepaid in the second half of the year.
—Tony Skiadas, Verizon CFO, April 2025
All our brands are growing at the moment in prepaid. And I think that we’re going to see that going forward. I’m really excited, and this was the right decision for Verizon to buy TracFone.
—Hans Vestberg, Verizon CEO
Many analysts had previously forecast a downturn in growth due to the new administration’s immigration policies. However, those fears have so far not materialized.
As for the revival of the prepaid market, MoffettNathanson analysts believe it comes down to two things. First, more new customers are opting for prepaid plans. Second, fewer people are switching from prepaid to postpaid and some are even migrating back.
The first would be that we are seeing more new customers entering the industry as prepaid rather than postpaid subscribers. The second would be that we are seeing fewer migrations from prepaid to postpaid, or even that we are seeing more migrations back in the opposite direction. (Obviously, these are not mutually exclusive; indeed, they would almost certainly be related.)
—MoffettNathanson analysts, May 2025
Regardless, this is a bright spot for the Big Three, considering they have been experiencing a higher churn or cancellation rate as well as stalling growth. This is also yet another sign of the stranglehold of AT&T, T-Mobile, and Verizon on the wireless market.
