Q3 in Wireless Shows Positive Adds by all 4 Major Carriers, while Sprint and Verizon lose prepaid customers

Compass is currently working on our Q4 Quarterly wireless and end of year metrics and snapshot, but wanted to share results from Q3 since we did not share those in December. This will be good to compare to when we release our Q4 results.
Compass Intelligence just completed the final assessment of Q1 with the major wireless carriers. 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.  Compass Intelligence also does this for the entire IoT/M2M market as well. A snapshot of Q3 2015 is below.

Source: Compass Intelligence

Compass Intelligence compared last quarter’s results to this quarter to show which metrics showed improvement over others (denoted by + or -).
Here are some initial thoughts on this quarter’s performance:

• OVERALL NOTES:
  • Smartphone growth is continuing to slow overall, but from Q2 to Q3, an estimated 7.1M postpaid smartphones were added
  • Tablet activations show growth but is expected to begin to taper in Q4, and with share plans and add-on options this presents overall lower ARPU
  • Verizon and AT&T continue to push their customers towards installment plans and are showing growth in terms of their overall base on EIP plans (AT&T leading)
• REVENUE: All carriers reported lower service revenue except for T-Mobile.
  • T-Mobile experienced 2.6% revenue growth from Q2 to Q3
  • Again the decline in revenue is due to Equipment Installment Plan push (provides for lower service revenue) and pricing pressures.
• CHURN: Conversely, all carriers reported a decline in postpaid churn compared with the exception of Sprint. Although Verizon continued to experience the lowest churn rate.
• POSTPAID ADDS:
  • Only Sprint showed improvement in postpaid net adds compared to last quarter. However, this is somewhat misleading as Sprint was in negative numbers last quarter (nowhere to go but up). Also, the Sprint net adds were driven by tablet sales and not higher ARPU smartphone adds. Conversely, T-Mobile added mostly new smartphone customers at a higher clip than all the other carriers.
  • ARPU (not shown here) is also lower across the board (tablets are also driving ARPU down). To mask this, carriers are presenting new metrics around “phone-only ARPU” or ABPU (average billing per user).
  • T-Mobile continues strong push forward, leading all carriers with PP net adds.
  • Verizon and AT&T growth is impacted by T-Mobile aggressive pricing; AT&T especially as it reported mediocre new PP additions.
• CONNECTIONS:
  • Total industry connections: 380.5M. Total industry subscriber base: 338.9M.
  • Total smartphone subscriber is 238.3M.(about 70% of total subs carry smartphones)
  • Postpaid (PP) smartphones for big four reached 168.3M (about 70% of total SP base).
• OTHER:
  • AT&T continues to push its Next program. It now has nearly 23 million subscribers on early upgrade plans.
  • Sprint shows some signs of progress but still has major hurdles to overcome (needs quality net adds). The company did show some decline in Wholesale MVNO (non-M2M) as well. This was traditionally a growth area for Sprint.
• Q3 News

• AT&T launched new wearables – BASIS Peak, Garmin vivoactive, Garmin vivofit 2 and the Microsoft Surface 3
• AT&T brand, Unidos, officially launched in Mexico
• AT&T introduces first nationwide TV and wireless combined offer
• AT&T introduces new work data rate plan to allow businesses to add an additional data rate plan to an employee’s personal device
• Verizon launches Samsung Galaxy Tab E, Samsung Galaxy Tab S2, and Samsung Galaxy S6 Edge Plus and Note5 devices, as well as the HTC Desire 526 and 626
• Verizon introduces an annual iPhone upgrade plan and becomes the first U.S. wireless company to offer roaming in Cuba
• T-Mobile launches the Samsung Galaxy Tab S2 and extended range LTE roll-out to 8 new markets in Q3
• T-Mobile launches Un-carrier Amped: expansion of Simple Choice to add calling, texting and 4G LTE data throughout Mexico & Canada
• Sprint launched Samsung Galaxy Grand Prime
• Sprint simplifies mobile services and tools for businesses and expands Direct 2 You to several new markets
• Sprint launched several aggressive pricing promotions including unlimited data, talk, and text for $60 and the iPhone 6s for $1/month