According to an article in Light Reading (link below) Tracfone has recently struck a “better deal” with their carriers that provides them a lower cost of service.
Tracfone announced it inked a new MVNO agreement that significantly increased its earnings. Some analysts believe TracFone’s new deal will pave the way for Comcast and Charter to improve their own MVNO deals.
“TracFone also reported a surge in EBITDA [earnings before interest, taxes, depreciation, and amortization] margins from 9% in 2Q19 to 15% in 2Q20, mostly driven by a new MVNO agreement that lowered their cost of service,” wrote the analysts at New Street Research in a recent note to investors. “We expect cable companies to show improving economics as they negotiate better MVNO terms as well.”
However, we know the cable companies already had a pretty good deal, if not the best one the carriers ever offered, so it’s to be seen if they can improve upon it.
In addition, it seems AT&T is looking to steal a piece of Verizon’s MVNO business.
It’s yet to be seen if these re-negotiated prices will provide lower consumer costs or higher commissions for the dealers.
US cable operators collectively added 547,000 mobile lines in the first quarter of 2020, raising their combined base to 3.74 million mobile lines. Meanwhile, the top incumbent mobile network operators saw their total retail phone subscriptions fall 1.3% year-on-year during that same period, according to Wall Street analyst firm MoffettNathanson.
TracFone added 214,000 new customers in the second quarter, a reversal from the 164,000 customers it lost in the same quarter a year ago. “May was especially strong as a result of US government stimulus and additional unemployment benefits reaching a broad proportion of the population and people sought attractive communication solutions,” the company wrote.
Read the entire article here
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