US Mobile Market Update – Q1 2018

5G Industry Transition – We have worked on every single G transition. Now that we are moving into the 5G cycle, we are heavily involved with players across the ecosystem and around the globe from very advanced markets to just emerging. Chetan Sharma Consulting is involved in several 5G strategic projects across three continents, across the value chain, so, have a front row seat into what’s coming. We have penned 7 research papers on 5G already, many of them industry firsts, and have several in the works for the coming months and years based on what we are learning from our work on the ground. Chetan Sharma Consulting will be providing more regular updates on our views on the technology, the shifts, the opportunities. We will also be discussing 5G in-depth at our annual Mobile Future Forward Summit in Oct with some of the best 5G minds in the business.

Highlights of the US Mobile Market Q1 2018

  • The US wireless market started 2018 like how last three years have started – with a service revenue decline. Of the last 13 quarters, only 3 have seen positive QoQ growth. Even mobile data service revenues dipped below the 0% growth market for only the second time in history. (Note: Historically, Q1 sees a decline from the busy Q4)
  • The biggest news of the quarter was of course the much-anticipated T-Mobile-Sprint merger (analysis below).
  • The 5G discussions are getting louder and more substantive with each passing day. However, it is the first “G” transition when net-revenues are in decline so presents a unique set of issues to the industry.
  • US Mobile Operator ARPU has been the envy of the operators worldwide but it continues to decline. For the first time, all four operators have their overall ARPU below $40.
  • T-Mobile continues to outshine its peers in net-adds and revenue growth performance. It captured majority of the postpaid and phone net-adds.
  • The connected devices segments (non-phone) crossed the 100M milestone in 2017 becoming the second country to do so.
  • Smartphone penetration stood at 94%.
  • For the first time, there were more connected smart watches added to the network than postpaid or prepaid phones. Connected smart watches (read Apple Watch) have proved to be a surprise hit for the operators.
  • The quarter saw a sharp decline (biggest decline ever) in connected tablets indicating waning interest from consumers in the segment. This might have implications to the 5G strategy for OEMs.
  • Connected cars and IoT continue to dominate the net-adds. Their share of the net-adds reached historic highs in Q1 2018. In fact, the combined category commanded well over 90% share for the first time.
  • Again, connected vehicles was the biggest net-adds category for the quarter which was dominated by AT&T.
  • While the operators struggled to maintain growth, the overall wireless market continues to grow rapidly thanks to the continued explosion on the 4th Wave by new digital players.
  • Net Income rose 10% while Capex and Opex declined sharply.
  • The mobile data pricing stabilized in Q1 with very few operator promotions.
  • Verizon’s IoT/Telematics business continues to gain steam and has become an important component of its digital story
  • Income/sub/mo gained as operators have tightened their belts and have improved their profitability despite pressure on revenues. On average, AT&T and Verizon took the bulk of the profits.
  • T-Mobile and AT&T saw increase in LTV. Verizon saw a sharp decline.
  • Overall ARPU continues to decline partly because of the device mix which is now including IoT that tend to be low ARPU albeit highly profitable subscriptions. But, the main reason of the decline is competitive intensity.
  • Overall, US is number one in total Zettabytes consumed on mobile networks ahead of India and China but due to the phenomenal surge of data traffic at Jio in India, India is likely to surpass US to become the dominant data consumption nation on the planet.
  • Industry capex is expected to pick up pace in 2018 as all operators are gearing up for their 5G strategies in 2018-19.
  • On the back of connected devices, AT&T led the industry in net-adds.
  • The overall industry upgrade cycle is over 3 years now.
  • In the race to a trillion, Apple is tantalizing close to becoming the first company to cross the milestone. Amazon, Microsoft, and Google also reported excellent earnings. 2018 could become the defining year for the trillion-dollar mark.

Other topics covered in the research update:

  • T-Mobile-Sprint Tie the Knots
  • Can Regulators evaluate the mergers in the new era with old tools?
  • The Race for the 5G icon
  • 5G – Known Knowns and Known Unknowns
  • US Mobile Operator 5G Narratives
  • Mobile Data Growth: What’s Next?
  • MAGAF’s dominance
  • Estimating 5G data demand
  • Realizing the 5G Promise
  • 5G as a platform
  • 5G Economics
  • The shifts in Net-adds
  • Ethics in Technology
  • What to expect in the coming months?
  • US Wireless Market Q1 2018 Analysis
    • Service Revenues
    • ARPU
    • Subscribers
    • 4th Wave Progress
    • Connected Devices
    • Handsets

We will be discussing the entire mobile industry value chain, the opportunities that are emerging at our annual brainstorm – Mobile Future Forward. The theme of the summit is Connected Intelligence: Exponential Ecosystems. We truly have some of the industry pioneers who will share their perspectives and blow you away with their vision and perspectives. Hope to see you there.

Your feedback is always welcome.

Chetan Sharma

We will be keeping a close eye on the trends in the wireless data sector in our blogtwitter feeds, and future research. The next US Wireless Data Market update will be released in Aug 2018.

Disclaimer: Some of the companies mentioned in this update are our clients.