T-Mobile, Sprint Dive Too Deep Into the Subscriber Pool

[Commentary] Where are all the new US wireless phone subscribers coming from?

Despite what would seem to be a fairly saturated market and the onset of heightened competition, the four biggest carriers appear set to add a net 4.3 million postpaid phone subscribers in 2014, according to UBS. That compares with a mere 737,000 in 2013. Indeed, this year should mark a level of net additions of the industry’s most valuable subscribers, those who don’t have to pay for service upfront, unseen since 2008.

One factor behind the gains: moves by T-Mobile US and Sprint to dig deeper into the pool of lower-credit-quality subscribers, previously relegated to prepaid plans. The risk is that this burnishes near-term performance but results in higher customer turnover down the line.