Q3 2016 and End of Year Assessment of the “Top 4 Mobile Carriers” - Net Adds Drop and Service Revenue Declines

Compass Intelligence just completed the final assessment of Q3 subscribers and connections including the comparisons to Q2 2016 in terms of improvements and declines for the U.S, Wireless Carrier market. We do this each quarter to understand the subscriber and share changes, as well as evaluate the key trends taking place in the wireless industry for both consumer and B2B.  We have been tracking the quarterly metrics since 2007. Some metrics are our own internal modeling and estimates, as the market does not report in all categories.
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A snapshot of Q3 2016 is below. Compass Intelligence compared last quarter’s results to this quarter to show which metrics showed improvement over others (denoted by + or -).

Below are additional thoughts and insights based on the quarter and annual performance:

• OVERALL NOTES:
  • T-Mobile added the most overall connections with 2M additions, followed by AT&T with 1.5M
  • In terms of Net Postpaid Adds, Verizon came out on top with 440K additions, while T-Mobile experienced a loss of 396K due to moving these customers over to their Wholesale category.
    • "On September 1, 2016, T-Mobile sold its marketing and distribution rights to certain existing T-Mobile co-branded customers to a current MVNO partner for nominal consideration. The sale resulted in a re-categorization of 1.365 million branded postpaid phone customers and 326,000 branded prepaid customers to wholesale customers (the "MVNO Transaction"). The reported branded postpaid phone churn of 1.32% in the third quarter of 2016 reflects the transfer of the MVNO Transaction customers prospectively from September 1, 2016." per T-Mobile earnings report
    • Actual T-Mobile postpaid net adds reached 996K
  • The market ended the quarter with about 5.2M new connections QoQ (includes IoT and mobile subscribers) by the top 4 carriers. Q3 overall added connections experienced about 300K in overall adds compared to what was added in Q2 2016 driven primarily by tablet and IoT additions.
  • Subscribers from the “Top 4” reached 301.4M (postpaid and prepaid) or an addition of 897K (this excludes MVNOs and regionals, US Cellular has yet to release their Q3 results)
  • While Verizon maintained the lowest churn in the quarter at 1.04%, all carriers increased their churn percentages with the exception of Sprint. Sprint reduced their churn compared to last quarter by dropping .04 basis points. Sprint has reduced its QoQ churn for the last 3 quarters.
  • A total of 1.3M tablets were activated in Q3 2016, with all 4 carriers showing positive additions with Verizon remaining the leader in this category with 13.4M total activated tablets.
  • REVENUE: AT&T and T-Mobile both increased their overall service revenue from Q2 to Q3 2016 (just as they did from Q1 to Q2). Both Sprint and Verizon experienced service revenue decline from Q2 to Q3 2016.
    • Combined the industry experienced ONLY a total of $156M in wireless service revenue increases from Q2 to Q3 2016, compared to $302M in increased service revenue from the previous QoQ comparison.  
  • POSTPAID ADDS:
    • The industry ended Q3 with a total of 482K in total postpaid additions from the previous quarter.
    • Verizon added 440K and Sprint added 344K in postpaid subscribers in Q3, while AT&T only grew by 94K. T-Mobile transferred 1,691 branded postpaid & prepaid customers to wholesale, so their numbers are not worth discussing.
  • CONNECTIONS:
    • Total industry connections reached 414M at the end of Q3 2016, includes all wireless carriers and MVNOs (subscribers and IoT connections). 403M came from the top 4 carriers.
    • Total industry subscriber base (excluded connected devices, IoT/M2M): 344M  
    • Total smartphone subscribers=265M (about 77% of total subs carry smartphones)
    • Postpaid (PP) retail subscribers for big four reached 250M