US Mobile Market Update – Q2 2016

Highlights of the US Mobile Market Q2 2016

  • 12 years ago, US mobile data revenues were less than 5% of the overall revenues. In Q2 2016, mobile data revenues crossed the 75% threshold becoming the second country after Japan to do so.
  • Service revenue declined again, down 2% YoY. Overall revenue was flat as device revenue made up for the decline.
  • Mobile data revenues increased 8% YoY while Voice revenues declined 31%.
  • Net income saw a nice bump, increasing by 10% YoY with AT&T leading the way with 14% increase.
  • Device revenues declined sharply as consumers are upgrading at a slower pace than before and new device launches haven’t really motivated consumers to upgrade.
  • The postpaid upgrade cycle was the slowest in recorded history reaching over 4.4 years in Q2. The overall industry upgrade cycle is over 2.5 years now.
  • For the first time, IoT (including connected cars) net adds exceeded phone and tablets combined.
  • There were more connected cars net-adds than there were phone net-adds. For the 7th straight quarter, AT&T added more cars than phones and tablets combined.
  • AT&T is dominating the IoT Revenues and with Verizon, the duo is pretty much cleaning up the IoT revenue stream in the operator segment.
  • AT&T’s connected car onboarding pace is 2x that of its connected tablets pace. Operator is expected to reach 10M connected car subscriptions very soon in roughly 12 quarters compared to 25 quarters it took for the tablets.
  • Verizon and T-Mobile have captured the bulk of the postpaid growth in the last three years.
  • EBITDA and Net Income saw double digit gains indicating operators are running a much tighter ship than before.
  • Churn is at historic lows. Despite all the commotion in the market, fewer customers are churning each quarter. Next churn opportunity is coming next month with the new iPhone release.
  • US is well positioned to cross 400M in subscriptions in 2016. As of Q2 2016, the subscription tally stood at roughly 390M.
  • The mobile data consumption continues to rise. US is third behind Finland and Korea in terms of GB consumed per sub/month and first amongst nations with more 60M population.
  • Verizon’s IoT+Telematics rose 25% YoY to $205M inching towards a $1B/yr run rate.
  • Apple’s service revenue is now consistently greater than iPad and Mac revenue streams making it the number two revenue stream behind the gargantuan iPhone bucket.
  • AT&T and Verizon on average made $17 per sub/mo while T-Mobile and Sprint roughly $1.6/sub/mo.
  • Android ecosystem revenues and profits improved slightly primarily on the back of Samsung’s quarterly results. As expected, iPhone units and revenues dipped again.
  • Sprint’s capex was lowest in recent memory dropping almost 80% YoY.
  • FCC’s Incentive Auction created a massive $86B clearing hurdle which is likely to translate into some issues with the process.
  • Pokemon Go became the latest app sensation growing at almost 4x the rate of the last rocketship – Angry Birds 2.

We will be doing an in-depth analysis of the future of the mobile industry at our 7th annual mobile executive summit Mobile Future Forward in Sept 2016. Hope you can join us.


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, future research reports, articles. The next US Wireless Data Market update will be released in Feb 2017.

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