Telecom & Wireless

Q1 2017 Was Not Kind to Mobile Carriers

U.S. mobile carriers reported their first services revenue decline in 17 years in the first quarter of 2017. Verizon Communications Inc. (NYSE: VZ) posted its first ever year-over-year revenue decline in services revenues as well.

These are just two data points from a new report on the first-quarter 2017 wireless market by consulting firm Chetan Sharma Consulting. The firm also noted that while operators like Verizon and AT&T Inc. (NYSE: T) “struggled to maintain growth, the overall wireless market is expected to grow 18% in 2017 …”

The revenue growth is expected to come from what Chetan Sharma calls the “4th Wave ecosystem,” that is, service revenues from apps. For carriers, this means more cellular data usage, but as the previous quarter illustrated, offering unlimited data packages comes with a nasty penalty to revenues.

Here are some other data points from the report:

  • T-Mobile US Inc. (NYSE: TMUS) led in most growth metrics esp. service revenue, net-adds, postpaid net-adds, and postpaid phone net-adds.
  • In the last 12 months, T-Mobile has captured 58% of the postpaid net-adds.
  • T-Mobile accounted for 337% net-adds for the quarter. Yes, you read it right.
  • Unlimited price war reached its inevitable apex with Verizon buckling under market intensity and offering unlimited. It has been 7 years since all four operators offered unlimited (but limited) data pricing in the US.
  • Despite the negative service revenue growth, net-income improved 13% as operators tightened their belts and lowered their expenditures
  • 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.
  • For the first time, cars accounted for 50% of the total net-adds for the quarter.
  • By the end of Q1 17, AT&T had almost 13M cars connected to their network, probably the most by any operator.
  • The overall industry upgrade cycle [for new hardware] is over 2.7 years now.
  • For the first time, the net adds for connected (cellular) tablets were negative.

Visit the Chetan Sharma Consulting website for more information.

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