US Mobile Market Update – Q3 2017

US Mobile Market Update – Q3 2017

Highlights of the US Mobile Market Q3 2017

After a brutal first quarter, the US wireless market had its best quarter of the year thus far. After three straight quarters of service revenue declines, the revenue grew sequentially though it was down on YoY basis.

One of the primary reasons of the recovery beyond T-Mobile’s continued growth was Verizon’s recovery in Q3. While unlimited has taxed its network, ARPU rebounded.

Smartphone penetration stood at 92%.

IoT and Cars accounted for 62% of the net-adds for the quarter.

There was rampant speculation about the T-Mobile-Sprint merger but as of yesterday rumors have surfaced that the potential merger has been called off. It is bound to reset some of the chess moves planned for the next few quarters.

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 came out ahead on a number of growth metrics: service revenue, postpaid revenue, overall ARPU, postpaid netadds, and phone netadds.

In the last 12 months, T-Mobile has captured 67% of the postpaid net-adds.

Net Income declined 2.4% while Opex increased marginally.

The mobile data pricing has dropped by 60% this year.

Despite the negative 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. While the growth has slowed down, it is marching towards a $1B business in 2018.

Income/sub/mo declined after two straight quarters of recovery with Sprint experiencing the sharpest declines. On average, AT&T and Verizon took the bulk of the profits.

Except for Verizon, all operators saw declines in LTV though churn levels are still at historic lows.

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 China and India.

Industry capex continues to decline as both T-Mobile and Sprint cut-back sharply. All operators are gearing up for their 5G strategies in 2018-19.

On the back of connected devices (98%), AT&T led the industry in net-adds.

AT&T again led in connected car net-adds and is a global leader in the segment.

The overall industry upgrade cycle is over 3 years now. iPhone X in Q4 should help bring it down.

Apple extended its marketcap to $860 Billion. The race for a trillion is really on. With its 10th year anniversary iPhone coming out this week, the odds of the trillion milestone have increased considerably.

Other topics covered in the research update:

  • Competition: How many mobile operators does a country need?
  • Mobile Data Growth: What’s Next?
  • MAGAF’s dominance
  • Infrastructure layer in turmoil
  • Estimating 5G data demand
  • 5G as a platform
  • Unlimited Data – Laws of Economics
  • 5G Economics
  • 4th Wave Index
  • IoT Revenue Streams and what it means for the ecosystem
  • The shifts in Net-adds
  • US Wireless Market Q3 2017 Analysis
    • Service Revenues
    • ARPU
    • Subscribers
    • 4th Wave Progress
    • Connected Devices
    • Handsets