Highlights of the US Mobile Market Q2 2017
- After a brutal first quarter, the US wireless market recovered a bit in Q2 with positive revenue growth though service revenue declined again.
- Q1 saw the first ever decline in US mobile data services revenue. In Q2, the operators saw a return to the positive territory. Verizon recovered.
- US mobile data revenues eclipsed the 80% mark for the first time. US became the second nation after Japan to do so.
- Smartphone penetration went past 90%.
- IoT and Cars accounted for 71% of the net-adds for the quarter.
- Ecosystem has been trying to find the next big merger but efforts haven’t borne any fruits yet.
- While the operators struggled to maintain growth, the overall wireless market is expected to grow 18% in 2017 thanks to the continued explosion on the 4th Wave by new digital players.
- The 4th Wave ecosystem is expected to grow by 60% in revenues.
- T-Mobile cleaned up the clock on most growth metrics: revenue, service revenue, postpaid revenue, overall ARPU, postpaid netadds, and phone netadds.
- In the last 12 months, T-Mobile has captured 58% of the postpaid net-adds.
- T-Mobile topped Capex/sub/mo for the second straight quarter.
- Despite falling revenue and sub numbers, Sprint saw a sharp increase in income. It’s Opex dropped 22% QoQ.
- Unlimited seems have to caught some operators by surprise and unprepared when it was almost a given that this will happen. Absent any market transaction, the pressure to deliver unlimited will remain.
- The mobile data pricing has dropped by 60% this year.
- Despite the negative service revenue growth, net-income improved 8% as operators tightened their belts and lowered their expenditures with Sprint seeing the sharpest increase.
- Verizon continued its steady march on the IoT/Telematics front. In 2018, it will become the third global operator to pass the $1B mark in the segment.
- Income/sub/mo recovered from last quarter with all operators showing improvement in profitability. On average, AT&T and Verizon took the bulk of the profits while T-Mobile and Sprint kept their numbers in the positive territory.
- T-Mobile and AT&T both improved their LTV while Verizon and Sprint saw its decline for the fourth straight quarter. Not surprisingly, T-Mobile’s LTV has seen the sharpest rise.
- Five years ago, T-Mobile’s LTV was roughly half of the average of the other three operators. In Q217, T-Mobile’s LTV surpassed the average of its rival’s LTV or the first time.
- 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.
- 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. Given the unlimited availability across all operators, US could surpass Korea in usage this year.
- The average data consumption in the US is likely to cross 6GB/mo by the end of 2017. The first 1GB took roughly 210 months. The last one just 4 months.
- Overall, US is number one in total Zettabytes consumed on mobile networks ahead of second placed China by a distance.
- Industry capex declined sharply by 18%, one of the sharpest decline industry has ever experienced in the US. Part of it is because all operators are mostly done with their LTE buildout.
- T-Mobile accounted for 58% net-adds for the quarter.
- In Q2 17, net-adds from IoT+Cars continued to lead the new additions to the ecosystem.
- AT&T again led in connected car net-adds and is far the leading operator in this domain.
- The SMS traffic has fallen off sharply. We are now at the levels when iOS and Android were just born back in the late 2000s.
- The overall industry upgrade cycle is over 2.8 years now.
- Apple continued to hover over the $800 Billion marketcap. The race for a trillion is really on. With its 10th year anniversary iPhone due this fall, the odds of the trillion milestone have increased considerably.
Other topics covered in the research update:
- Where art M&As?
- Mobile Data Growth: What’s Next?
- T-Mobile’s domination of net-adds
- Estimating 5G data demand
- 5G as a platform
- Unlimited Data – Laws of Economics
- Race to the Trillion
- Artificial Intelligence: Underpinnings of a Disruptive Wave
- 5G Economics
- 4th Wave Index
- IoT Revenue Streams and what it means for the ecosystem
- The shifts in Net-adds
- Competition Regulations in the new age
- US Wireless Market Q2 2017 Analysis
- Service Revenues
- 4th Wave Progress
- Connected Devices
We will be covering the Global mobile market in much detail at our annual summit – Mobile Future Forward on Sept 7th in Seattle.
Your feedback is always welcome.
Disclaimer: Some of the companies mentioned in this update are our clients.