U.S. Q2 Wireless Carrier Assessment

Compass Intelligence just completed the final assessment of Q2 subscribers and connections including the comparisons to Q1 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. 

A snapshot of Q2 2016 is below. Compass Intelligence compared last quarter’s results to this quarter to show which metrics showed improvement over others (denoted by + or -). 

Source: Compass Intelligence, 2016

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

• OVERALL NOTES:
  • T-Mobile, followed by AT&T had the better Q2 among the top 4, with both carriers experiencing 9 out of 12 in improvement ratings from Q1 to Q2 2016.
  • The market ended the quarter with about 4.9M new connections QoQ (includes IoT and mobile subscribers) of which 4.8M were added by the top 4 carriers. Q2 overall added connections is a decline of about 2M compared to what was added in Q1 2016 driven primarily by tablet and IoT additions.
  • Subscribers from the “Top 4” reached 300.5M or an addition of 2.1M and about .3M was added by other MVNOs and regional carriers.
  • While Verizon maintained the lowest churn in the quarter at .94%, all 4 carriers reduced their churn compared to last quarter.
  • A total of 1.3M tablets were active in Q2 2016, with all 4 carriers showing positive additions with Verizon remaining the leader in this category with 12.9M total activated tablets.
• REVENUE: AT&T and T-Mobile both increased their overall service revenue from Q1 to Q2 2016, while the previous QoQ service revenue for AT&T declined slightly. Both Sprint and Verizon experienced service revenue decline from Q1 to Q2 2016.
  • Combined the industry experienced ONLY a total of $302M in wireless service revenue increases from Q1 to Q2 2016, compared to $1.4B in increased service revenue from the previous QoQ comparison.
• POSTPAID ADDS:
  • Sprint was back in the negative after experiencing positive postpaid net adds in Q1. The industry ended Q2 with a total of 1.6M in total postpaid additions from the previous quarter.
  • Verizon added 609K and T-Mobile added 890K is postpaid subscribers in Q2, while AT&T grew by 156K and Sprint experienced a 6K decline.
• CONNECTIONS:
  • Total industry connections reached 411M at the end of Q2 2016, includes all wireless carriers and MVNOs (subscribers and IoT connections).
  • Total industry subscriber base (excluded connected devices, IoT/M2M): 348M  
  • Total smartphone subscribers=255M (about 73% of total subs carry smartphones)
  • Postpaid (PP) retail subscribers for big four reached 250M 

 
Final Word – The industry has reached 73% saturation among smartphone subscribers and overall service revenue has declined by 1.9%. Two avenues for major growth are centered around IoT and content. Content drives access to applications, which in turn provides increased growth and usage of data, video, and other more interactive services. The industry is seeking out new avenues for revenue and profit, including through new content revenue streams demonstrated by the recent acquisitions of Verizon with Yahoo! (and AOL) and AT&T with DirecTV. IoT growth has primarily been driven around the connected vehicle and connected home, but the industry becomes even more interesting as the carriers leverage their new content partners to offer new offerings to entice through the use of media, games, sports, streaming TV/music, news, weather, and much more. Expect to see exciting announcements in Q3 and Q4 in how the carriers will leverage content to reduce churn, and offer new revenue streams that may be noticed on the backend, meaning customers may require MORE data.

As for IoT and connected devices, the industry is experiencing an overall 17.9% growth in reported numbers from a year ago but we have yet to really hear on a quarterly basis the overall revenue generated from IoT alone. Verizon reported about 3 quarters back and we have seen some anecdotal tidbits here and there, but the industry and Wall Street will be pushing for more of that detail in the near future.  Also, keep in mind, that some of the reported numbers for connected devices also include activated tablets (for example at US Cellular). IoT, M2M, and connected devices reached 62.4M in Q2 just in the U.S. alone.