Did T-Mobile’s Growth Slow Down In Q2?

by Trefis Team
Rate   |   votes   |   Share

T-Mobile (NASDAQ:TMUS), the third-largest U.S. wireless carrier, is scheduled to publish its Q2 2017 earnings on Wednesday, July 19, reporting on a quarter that saw mounting competition in the wireless market. In this note, we take a look at what to expect when the carrier publishes earnings.

We have a $66 price estimate for T-Mobile, which is slightly ahead of the current market price.

See our complete analysis for  Verizon | AT&T |T-MobileSprint 

Competition Could Limited Postpaid Net Adds

T-Mobile led the industry with 798k branded postpaid phone net additions during Q1’17. While we expect the company to continue to lead the market over Q2 as well, there is a possibility that its net additions could see a significant sequential decline, as larger rivals Verizon and AT&T began offering unlimited plans of their own to mainstream customers from mid-February, potentially reducing the need for their subscribers to port-out. Verizon noted that it added a net of 109k retail postpaid connections over the 6 weeks after the unlimited plans were launched, allowing it to reduce overall postpaid phone losses for the quarter. As Q2 marks the first full quarter of availability of these plans for AT&T and Verizon customers, the supply of defecting customers to T-Mobile is likely to have reduced. Competition with Sprint is also likely to be heating up. The smallest nationwide carrier offers the lowest-priced unlimited plans and its promotions are becoming increasingly aggressive. For instance, last month, Sprint essentially offered Verizon customers a full free year of service if they port to Sprint.

ARPU In Focus As Industry Sees Declines In Consumer Wireless Spending

Consumer spending on wireless services in the U.S. saw their sharpest decline, falling by about 9% over March and April 2017 alone, per the Bureau of Labor Statistics, likely driven by greater adoption of unlimited plans by customers of the big-two carriers, who typically have most high-value subscribers (related: U.S. Wireless Price Wars Are Making A Big Impact). However, we expect T-Mobile’s postpaid ARPU to remain flat or see a marginal improvement year-over-year, given that its One plans are priced higher than its legacy entry-level tiered data plans. That said, its ARPU remains among the lowest in the industry, and we don’t expect the situation to change in the medium-term, as they will be capped on account of the unlimited plans and T-Mobile’s move to lock-in pricing for new customers, preventing it from raising prices down the road.

View Interactive Institutional Research (Powered by Trefis):

Global Large Cap U.S. Mid & Small Cap European Large & Mid Cap
More Trefis Research

Rate   |   votes   |   Share


Name (Required)
Email (Required, but never displayed)
Be the first to comment!