Home - , , - América Móvil's TracFone Loses 458 Thousand Subscribers, Earnings Decline 24%

América Móvil's TracFone Loses 458 Thousand Subscribers, Earnings Decline 24%

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TracFone, the largest US MVNO, reported this week that it lost 458 thousand customers in the quarter ended March 31, 2016. This is the second quarterly subscriber loss in row by TracFone, which until Q4 ,2015, had a long history of successive quarterly subscriber increases.

TracFone is a subsidiary of América Móvil, a Mexico based, multi-national corporation that is the fourth largest mobile operator in the world. In the US TracFone operates as a MVNO, reselling service on all four US national operators under the Straight Talk, NET10, Tracfone, Simple Mobile, Page Plus, Total Wireless, Telcel America and SafeLink Wireless brands. According to América Móvil, last quarter's US subscriber losses were mainly with the TracFone pay as you go and Safelink Lifeline brands.

TracFone's earnings before interest, taxes, depreciation, and amortization (EBITDA) also took a big hit last quarter, falling by 24.2% year over year. The decline was mainly due to a 22% drop in EBITDA from device sales.

It's not all bad news for TracFone. Monthly Average Revenue Per User (ARPU) increased to $21, compared with $20 a year ago. Churn decreased from 4.5% to 4.3% year over year.

I believe that TracFone's decline in subscribers and earnings is largely a result of aggressive price cutting and port-in promotions by AT&T's Cricket, Sprint's Boost Mobile and T-Mobile's MetroPCS prepaid brands. TracFone has responded with new plans that include more data and with device price cuts, but it hasn't been enough to prevent subscriber loss. If TracFone, the largest, most successful MVNO is posting subscriber loses and earnings declines, smaller MVNOs are likely hurting badly.

Source América Móvil (PDF)

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53 comments:

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  1. That's true and i completely agree with you. Smaller Mvno's will suffer even more than the big ones which is really a shame considering some really good ones like Selectel may be in danger of going out of business.

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  2. This doesn't mean that other MVNOs are hurting badly. What isn't being said is that there is so much dissatisfaction with The TracFone brand by dealers/retailers that they are moving their customers to more favorable MVNOs like Selectel, Rok Mobile, Talk On Cellular, AF Mobile and others that don't treat their dealers like a side note.

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    1. Right. I expect more America Mobil losses due to dealer commission cuts. I think they will regret this move, but not until after they lose a few million customers that were satisfied with local dealers.

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  3. Smaller mvnos don't have the overhead costs that tracfone does.

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  4. Airvoice and H2O are next. Better deals at Metro and Cricket.

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    1. Nope. AirVoice and H20 serve niches that Metro and Cricket don't cover. And AirVoice has excellent customer service.

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    2. Real Mobile and Good2Go could be next to drop AT&T.
      Budget, Up, Liberty and Pride might not be able to compete on T-Mobile. I don't think Lyca is competitive, but they have the money to stick it out.

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    3. Airvoice and H2O serve the low end market (paygo and sub $30). I am in the sub $30 dollar range and some of my relatives are in the paygo. No reason for me to go to metro and cricket to pay more than what I use.

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  5. my opinion, as a tracfone (as a backup) user: its pretty much my only option to have verizon coverage for rural western US, but its still too expensive as a primary service for me. 4G LTE handset offerings from Tracfone were way too slow to hit the market, so most of us bought them from other sources and did the BYOP deal (lost revenue for TF). The last problem, and a BIG one for TF, is they are not playing nice in the world of unlocking their TF branded handsets. prepaid users want the freedom to switch around services as their needs change. We're not going to buy TF branded handsets because TF locks them up so tight. TF loss. I don't have brand loyality to TF, but I don't want my TF/verizon service to go away either. I'm really not too worried that will happen, though, because TF is so big and established. What I'd really like to see is TF loosen up on their tight phone locks!

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    1. Have you looked into redpocket's eBay plan for Verizon coverage?

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  6. Rok Mobile getting GSM will hurt those 2.

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    1. Tracfone is mass marketed everywhere. Rok is extremely obscure.

      No impact at all.

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  7. Tracfone is still dropping Lifeline customers due to fraud.
    Subscribers are using less voice and more data. Tracfone plans are compex; you need a spreadsheet and a good forecast to pick the right plans. And then you have to buy and load multiple cards. I think Tracfone is losing voice customers as they move to smartphones and want to use data without going through all that analysis. And Tracfone family and smartphone plans are not very competitive.

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    1. Being on the Verizon network is a huge advantage in states east of the Mississippi as well, especially compared to anything Sprint or T-Mobile based.

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    2. Verizon doesn't give a damn about prepaid. The think it's a necessary evil. I will never use them again. We have excellent coverage on the other 3 so I don't need them either.

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  8. American Movil is considered by many to have the WORST CS out there.

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    1. America Movil is awful!

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    2. Not the worst anymore! Ringplus and freedom pop, while both have free service, are definitely worse now than tracfone on customer service!

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    3. RingPlue and FreedomPop will eventually solve your problem. With Am Movil, you have to make lots of calls and never know whether you will get it fixed. They are the worst time-wasters, the most frustrating.

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  9. Ymmv. Some dealers consider H20 cs worse then Tracfone. I personally avoid anything with less then average service if I can help it. I take a cherry pick attitude and take only the BEST each carrier offers which make them worth dealing with their cons. Tracfone's paygo system on Androids is a joke. Triple buckets and you can't use them all up or transfer say talk credits to data or text credits to talk, If you never use one or two of the three talk/text/data you are going to forever be spending money topping off to get more of what you do use and have a eternal surplus of what you don't use defeating the zero loss theory model of paygo. Page Plus is a Tracfone company but their Verizon based paygo is more effecient and simple to understand then Tracfone despite a 3G phone only limitation.

    Tracfone is losing people in two markets that matter less and less as Lifeline /Safelink people don't pay money out of their own pockets and almost every Lifeline provider really has to watch it these days anyway (Total Call , not to be mistaken for the Tracfone/Walmart brand Total Wireless , a formerly general Sprint mvno that went all Lifeline is getting sued by the FCC for $61 million for fraud). And paygo users are the least valuable to most carriers. They look good in a body count but someone on a $80 a year plan isn't going to be something to cry about for most mvnos if they should leave.

    But the bottom line is the business is changing and Tracfone, is taking a beating. I believe many more independents will drop dead this year. Life in prepaid wireless land. A tough one.

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    1. PagePlus charges you 50c/month on PayGo whether you use phone or not. And their systems are flakey now that Tracfone fired everyone and took the backend work in-house.

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  10. Looks like Verizon backed the wrong horse saying Tracfone was their prepaid brand

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    1. Can I let you in on a secret? Verizon couldn't care less if Tracfone lost customers. They are focused on their higher margin postpaid customers because that's who pays the union salaries and pensions.

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  11. Lyca mobile is also bad with customer service. Will never consider them again.

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    1. I agree that Lyca CS is bad. They promise but don't deliver. I would only use Lyca with a new number, to keep a phone active at minimal cost.

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  12. LTE Smartphones with VoIP apps and/or Wifi Calling are the in thing now, but Tracfone's failed to keep up.

    They still push voice and text plans even though those are becoming a mere fallback (just in case).

    And their going price for simply using the service is a $50/yr surcharge tacked onto whatever plan you buy.

    Meanwhile, everyone else is ramping up the amount of data they offer, throwing in Unlimited TnT just because and racing to the bottom to see just how much they can optimize their prices while still remaining profitable.

    The fact is, Tracfone's service is convoluted and uncompetetive. Bigger spenders can get more bang for their buck elsewhere, leaving Tracfone to scrape the bottom of the barrel where extremely low usage subs and rural subs (who're reliant on the Big 2) reside.

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    1. I agree, the BYOP triple bucket system could use simplifying , but that is how a smart phone operates - with talk, text, and bits of data. For the lower usage subscriber, TF is hard to beat in a lot of ways. I wish you could buy minutes separately, same as text, data.

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  13. tracfone byop triple buckets can get emptied for no reason. you pay for refills but then tracfone rips you off by emptying your buckets. and you end up calling their foreign customer service begging for your money to be put back into your buckets. it's no wonder that tracfone is losing customers except for the old folks who only use no-data flip phones that they only use for emergencies.

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  14. They will be losing more this next quarter! They recently lost not only a number I had with them, but also lost nearly 400 minutes I still had on that phone. They claimed they terminated it do to non-use, but according to their dates, it's totally wrong. I had been using the phone periodically up to the date they claimed they disconnected it. I had actually made some calls in the preceding *days*. This was a backup number I had ported out of a landline while moving and so was only using it here and there. There was plenty of time left on it, nearly 400 mins, and had used just days before they disconnected it. They reactivated it with a different number, but would not give me the minutes back, even after sending me up the foodchain to see what could be done. Effectively nothing. I have a phone with 0 mins good until December. I REFUSE to add a card to it just to appease them. I have already moved one line I had with PPC out to another provider this last week and will be moving my other TF and PPC lines as soon as I can. I will also recommend that some family members who use TF port to other providers. Not going to make or break AM, but if thousands more encounter problems like this it could add up! And hopefully will. Not only for less profit for them, but more profit for their competition!

    I have to say that one of the best prepaid operations I have dealt with is ATT's Gophone. Have dealt with them instore and over phone with customer service. Always get top notch attention and service. Wish they has some better rates, but that is only part of the whole picture.

    I had put up with TF and their subpar CS for a long time, but the loss of nearly $40 worth of airtime is inexcusable....especially when it was NONE of my fault and entirely theirs.....while they refuse to acknowledge it. I wasted an hour or two on the phone with them just on that matter and got effectively nothing out of it. It's not worth my time to waste any more effort/$$$ with them, and hope others are wise enough to do business elsewhere too!

    Would be nice to see comparisons when others report their figures for the same time frame. nearly 1/2 million losses in one quarter amounts to nearly 2 million in a year. What is that as a % of their overall numbers?

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    1. I dumped tracfone in 2009, when they forced me off verizon and onto att. Been with tmo ppd to date.

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  15. Tracfone also resells service on U.S. Cellular.

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    1. They used to but it hasn't been possible to activate a TracFone device in a US Cellular only market for a couple of years. TracFone CDMA feature phones can still roam on US Cellular.

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  16. Interesting, I didn't know that. I'm in a U.S. Cellular market, Mendocino County in rural Northwestern California.

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  17. I'm in Redwood Valley, halfway between Ukiah and Willits.

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  18. I'am going to tell why why the loss. Ringplus got all their customers. People don't want to paid for cell service if they have other options.

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    1. " Ringplus got all their customers. People don't want to paid for cell service if they have other options."

      Do you have any evidence of this? I've never ever heard of Ringplus outside of this web site and other "phone-nerd" sites. On top of that, it is a big downgrade from Tracfone starting with the huge loss in data coverage.

      It'd be interesting to see the evidence. I have no proof either, but I would suspect that the customers leaving Tracfone are going to other MAJOR MVNO's and divisions where you can actually get cards and phones at Walmart and 7-11 etc.

      Hardly anyone knows about RingPlus.

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    2. If you have not head of Ringplus then you have been living in a cave. Ringplus is everywhere and anyone knows about it. Stop being naive.

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    3. LMAO, everyone has not heard of ringplus. Ringplus has major problems like weekly outages, and call latency. Sprint poor coverage as well. Just go to Howardforums and there are tons of ringplus complaints (although it is free AFTER topup).

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  19. This story needs to be taken in context. This is not the doom and gloom of the worlds third largest cellular provider. The industry is changing and many consumers have different needs. There also was volatility in the pesos to dollar ratio. Here is a blip from Market Watch:

    "Extreme volatility in exchange rates during the quarter made managing sales of dollar-based equipment such as handsets difficult, hampering commercial operations, the company said.

    América Móvil shed 1.7 million wireless subscribers during the quarter, ending with 283.9 million, while adding around half a million subscriptions to fixed-line services including phone, Internet and television, ending the quarter with 81.3 million. The loss of prepaid mobile subscribers who weren't generating revenue was partly offset by gains in postpaid customers."

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  20. Financial results aside, I'm a little surprised by so many negative remarks about TF service. Have two unlocked devices through TF (Lg G2 (VZ) and BLU Vivo XL (AT&T). Great 4G LTE coverage in south central PA and never a problem with balances/buckets. I, for one, appreciate the value and byod options.

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    1. Customer service is their main flaw. As long as you don't have something difficult to fix you should be fine but if you have a major billing error or technical issue... good luck...

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    2. Anon: Being on much better, the actual [1] "service" of TracFone is tops, and will smoke anything based on Sprint and T-Mobile.

      But then you get [2] "customer service". TracFone is ranked terrible compared to most anything..... for customers who have problems to solve.

      But the vast majority of customers will never deal with CS, which leaves the first "service" as being the most important... usually. And that is what you are experiencing.

      Delete
  21. I'm a light phone user, been with TracFone for years, have not found a better option for my money, and don't plan to leave anytime soon.

    My interactions with customer service have been fine and resolved quickly in recent years.

    I would recommend using their online chat option for customer service to anyone who has never tried it. Eliminates language barrier and having to repeat numbers, etc.

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    1. But TF chat wont solve a credit card payment issue so then you have to call cs who makes you give all your personal info verbally including your card numbers over the phone and then sometimes repeat it all 1 or more times to yet another cs rep! I had an auto refill account and debit card on file both of which have magically vanished with a cutie new page which never actually connects to anything. The result is tf won't accept payment even on Discover and I have no voice service.

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  22. Couldn't happen to a nicer owner...

    , in case it doesn't come through via written post.

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  23. Yup...This is definitely due to RingPlus gobbling up customers from PagePlus....

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  24. I deal with many lines of service for many individuals and businesses.

    None will ever be on a movil owned brand. Absolute worst CS experience (for any product/service), repeatedly over a few years means they are dead to me and the 100's of lines I influence.

    I actively seek out what "brand" people are on and if it's a movil brand I do whatever it takes to get them off movil.

    I wouldn't shed a tear if they died and went away, not likely given Slim's billions.

    For those who are happy, you just have never had anything other than the simplist, most routine issue or request, God help you if you ever need anything more.

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    1. yes god help you current tracfone users if you ever have a bad complex problem on tracfone. when you do, you will realize how blissfully blind you have been all this time to tracfone's incompetence to anything but the simplest problems that their know-nothing script-reading customer service can only handle.

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    2. I got screwed out of $40 by Am Movil even tho I was never even their service customer! Sold my Straight Talk iPhone 5 to a woman who wanted to port her home number to ST for use on the iPh5 with Verizon service. She already had a ST smartphone and ST 3G hotspot on Verizon. ST told her she could not port her number "because they had no Verizon service in her area." She told them that she can only use Verizon service, and had good ST Verizon bars with her devices. No dice. I let her return the phone, but could not reuse it on Verizon MVNOs: "Device is already in use." ST assured us several times that the MEID was not active in their system. Executive Resolutions Dept. supervisor confirmed this. After 3 months, the MEID mysteriously cleared for activation. I sold the phone, but had to take $30 less and lost my $10 original shipping cost.

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    3. I should have added that the ST iPhone 5 MEID was clean when I sold it because I had ported my number out of my MVNO. ST tied it up somehow for ~3 months.

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  25. I agree with Dennis' assessment that this loss is a result of increased competition from MNOs/their subsidiaries. I can only imagine that the MNOs' endgame is to absorb the MVNOs' customers into their own folds, but isn't this cutting off the nose to spite the face--or do MNOs care less about the MVNOs not being able to pay their access rates than wanting the customers for themselves?

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  26. Well i don't want Tracfone on my bad side because i have an account with them so that is what my name is!

    Let's start, In the past i was a ambassador for Tracfone and then after 6 months into my 25 years with Tracfone, i get rude customer service although now you can use chat but the reps need customer service training and a whole lot more training! I have dealt with cs people that it seemed like, i know i was training them myself and guess what, about 1 % of them would listen!!!
    They took a family members total data balance and upon inquiry blamed him for using it with text messages which he didn't and we verified data was turned off the entire time but we aren't through yet with them getting in touch with the Better Business Bureau!!! We are in the state that won the giant tobacco lawsuit so i Tracfone will be paying what my relative's phone is due!
    A lot of Tracfone users, including me, are never able to get correct account balances; another way Tracfone steals from their customers! Mind you we try getting it on the phone, using their app, or going in their account At Tracfone.com and their system is always glitched in Tracfone's favor!
    You know it doesn't matter whether you use Tracfone a little or alot, customers balance is theirs not Tracfone's discretion!!!
    Yes Tracfone's customer service may be improved but did they ever upgrade their computers? I always got the line from CS rep, "MY COMPUTER IS RUNNING SLOW!!!! OR "MY COMPUTER HAS LOCKED UP AND I WILL HAVE TO REBOOT IT, DO YOU MIND WAITING?" OR "CAN I PUT YOU ON HOLD FOR 2 TO 3 MINUTES?" AND BY THE TIME YOU MIGHT HAVE YOUR ANSWER, THEY HAVE ASK YOU THE 2 TO 3 MINUTES ? FOR 8 TIMES OR MORE!!!!!
    TRACFONE GIVES YOU TELEPHONE #S THAT CALL YOU ALL HOURS OF DAY AND NIGHT FROM UNLISTED #S AND WHEN YOU CALL THEM BACK IT SAYS THE # IS NOT VALID!!! ANOTHER WAY TRACFONE CHEATS THEIR CUSTOMER OUT OF THEIR ACCOUNT BALANCES!!!!
    Does this tell you why they have lost so much money and accounts? I listed 3 months on one of Dennis's postings that Tracfone was going to lose people based on all these factors plus that it was time to either cut their prices or raise the amount of balances our $s buy AND I WAS MOST CERTAINLY RIGHT!!!! BUT TRACFONE HASN'T LISTENED TO THEIR CUSTOMERS SO, YOU REAP WHAT YOU SOW!!!
    Their is a bright side of what one user put, if you are elderly and don't want a smartphone, Tracfone makes you get only a flip phone with real buttons and you only get double minutes which these days is a rip off. You can PURCHASE A AT&T GO PHONE z222 OR z223 AND BUY A TRACFONE 4G ACTIVATION KIT AND PUT THE SIM IN IT AFTER GO TO AT&T AND ASKING THEM TO UNLOCK YOUR PHONE OR BUY A CHEAP TRACFONE THAT ENDS IN THE MODEL G AND PULL THE SIM CARD FROM IT AFTER ACTIVATING YOUR TRACFONE MODEL, THEN PUT THAT PHONE'S SIM CARD IN THE GO PHONE AND YOUR MINUTES YOU BUY FROM THEN ON OUT WILL BE TRIPLE MINUTES ON TRACFONE'S SERVICE!!! YOU CAN BUY THESE MODELS AT www.bestbuy.com now for around 7.99 or more and for older adults with hard hearing the ringer and volume when set mid level is loud enough or you can bust the volume out on the highest level.
    I know how hard times are these days for everyone and really like to help out in any way i can because it is what the God that still lives, teaches in his word!!! May God bless you all!!!
    As for Tracfone upping their balances, it is time for Tracfone to give quadruple minutes!!! Want to keep customers? WELL LISTEN TO SOMEONE WHO HAS DONE THE RESEARCH!!!! ; )

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  27. Funny how many people know how to run Tracfone better than Slim.

    Funny how few of those people are millionaires, much less billionaires.

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