Will T-Mobile’s Growth Face Pressure As Verizon And AT&T Turn Around Their Postpaid Operations?

by Trefis Team
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T-Mobile (NASDAQ:TMUS), the third-largest U.S. wireless carrier, is expected to publish its Q3 2018 results in the coming days. Below, we take a look at some of the key trends that are likely to drive the company’s results for the quarter.

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Will T-Mobile’s Postpaid Net Adds Slow Down? 

While the carrier should continue to lead the industry in terms of postpaid phone net additions, it could face some pressure from larger rivals AT&T and Verizon who have been turning around their postpaid phone operations driven by their unlimited offerings. During Q2 2018, T-Mobile added 686k postpaid phone subscribers, and the company expects to add 3 million to 3.6 million branded postpaid net customers (phone and other connections) over this year. The company’s net adds over Q3 should be driven by the launch of iconic devices including the iPhone XS and Galaxy Note 9 and some promotional offers. While the wireless space is also getting increasingly saturated, limiting the pool of new customers T-Mobile can tap into, we believe that the carrier has scope to grow its postpaid base in the medium term, driven by its deployment of low-band spectrum (which should help it improve coverage) and its move to expand its retail stores. (related: How T-Mobile Is Looking To Keep Its Postpaid Phone Momentum Going).

How Will ARPU Trend? 

Net additions aside, we will also be closely watching the company’s postpaid ARPU, which has been facing some pressure in recent quarters. While the company saw ARPU post sequential and year-over-year declines in Q2, as more customers came on board tax-inclusive plans, it’s possible that this could be partly offset by a reduction in the company’s service promotional activities and more customers signing up for the T-Mobile One Plans.

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