Leap Wireless International plans to continue expanding its Cricket prepaid brand into retail stores as the operator’s smartphone strategy pays off, company CEO Doug Hutcheson said during a talk at the Goldman Sachs 20th Annual Communacopia Conference yesterday.
“The focal point this far has been to expand the branded locations that we have,” Hutcheson said, citing Cricket’s expansion in 250 stores by the middle of this year. “By year end we think we’ll have done over 500 expanded branded stores, and also as we move into the fourth quarter you’ll see us also adding substantially more national retail distribution.”
That expansion comes on the heels of Cricket’s successful entry into the smartphone market, a riskier play for prepaid providers that are more vulnerable to the impact of costly device subsidies.
For example, MetroPCS’ profits took a hit from Android subsidies and it did not see an immediate reduction in churn. The smartphone play seems to be working out better for Cricket: Churn for its smartphone customers runs at about 2 percent, half the churn of its feature phone subscribers.
About 27 percent of Cricket’s customer base is now on smartphones or devices equipped with its Muve Music service, Hutcheson said. That number should hit 50 percent by mid-2012.
“By middle to late next year, we’ll have about half the base on (smartphones),” Hutcheson said. Cricket’s smartphone customers have about twice the lifetime value of its feature phone customers.
Cricket’s Muve Music service has been a resounding success. Hutcheson said the 200,000-plus customers on the plan have an “attractive increase in ARPU” and listen to the service for nearly three hours a day.
“Once you get ’em loaded up with music, they stick,” he said. “We’ve been really pleased with the attractiveness and stickiness of the plan.”
Hutcheson also made some comments about the operator’s LTE plans. He restated his pledge to light up its network this year, and said the “market is up and running.” The company will expand its LTE footprint during the second half of next year and into 2013.