Highlights of the US Mobile Market Q3 2016
- After four straight quarters of service revenue declines, Q3 2016 saw an increase in service revenues. The increase was primarily due to T-Mobile. Overall revenue also increased.
- Net income increased by 6% with Sprint and T-Mobile making good gains. Verizon’s net income declined.
- In the last four quarters, T-Mobile has accounted for a whopping 81% of the phone net-adds.
- After seeing the decline for last couple of quarters, the device revenue jumped 7% QoQ helped by the iPhone launch.
- The overall industry upgrade cycle is over 2.5 years now.
- Verizon and China Mobile are slated to become the first operators in the world to generate $50B in mobile data revenues in a calendar year.
- 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 in the US.
- AT&T’s connected car reached the 10M milestone in Q3 2016, the first operator to do so. AT&T reached this milestone in less than 12 quarters compared to 25 quarters it took for the tablets.
- Industry EBITDA and Net Income saw 6% gains indicating operators are running a much tighter ship than before.
- For the year, non-phone net-adds are at 71% share with Cars and IoT dominating.
- Churn is at historic lows. Despite all the commotion in the market, fewer customers are churning each quarter.
- US is well positioned to cross 400M in subscriptions in 2016. As of Q3 2016, the subscription tally stood at roughly 395M.
- The first 100 million connections in the US took 18 years. The last 100 million just 6 years.
- 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.
- The average data consumption in the US will touch 5GB/mo by the end of 2016. The first 1GB took roughly 210 months. The last one just 4 months.
- Apple captured 79% of the profits in the device ecosystem in Q3 2016. All the gains made by the Android ecosystem in the last quarter were lost primarily due to the steep drop in Samsung’s fortunes.
- We are likely to see a first time decline in both revenue and profits in the handset space in 2016.
- Verizon’s IoT+Telematics rose 25% YoY to $217M 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 improved their numbers to $2.7/sub/mo.
- Sprint’s capex continued to decline with a 73 % YoY drop. Industry capex declined 17% YoY.
EPIC week for the industry
There is never a dull moment in our industry but last week was EPIC. It will take many weeks to truly understand the long-term implications. Consider this:
- AT&T made its biggest blockbuster deal yet with the acquisition of Time Warner for $85B.
- Qualcomm made a bid for NXP for $39B.
- CenturyLink acquired Level3 for $25B.
- Google’s Fiber plans hit a snag.
- FCC passed tough privacy regulations limiting ISPs ability to monetize data.
- AT&T launched DirectTV Now.
- Verizon and one other major player might not be participating in the broadcast incentive auction.
- Microsoft upstaged Apple in the computing wars for the first time in a generation.
- T-Mobile continued its run in cleaning up the postpaid table.
- AT&T reached the 10M connected car milestone in Q3.
Your feedback is always welcome.
Chetan Sharma
We will be keeping a close eye on the trends in the wireless data sector in our blog, twitter 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.
