Competition will intensify in the U.S. telecom market heading into 2020 due to the launch of 5G services and the potential T-Mobile/Sprint merger

HAMPTON, N.H. (June 8, 2018) — Wireless revenue rose 3.1% year-to-year to $58.4 billion among U.S. carriers covered in Technology Business Research Inc.’s (TBR) 1Q18 U.S. & Canada Mobile Operator Benchmark as higher equipment revenue spurred by the adoption of premium devices offset continuing service revenue declines. Increased adoption of premium devices is benefiting equipment revenue as devices such as the iPhone X have pushed the acceptable average selling price for smartphones to over $1,000. Verizon, AT&T and Sprint expect service revenue declines will gradually moderate in 2018 as the bulk of customers are now on unsubsidized service plans. However, service revenue will be negatively impacted by the new ASC 606 industry accounting standard as well as lower overage revenue stemming from the growing adoption of unlimited data plans.

The report examines how the recently announced T-Mobile and Sprint merger would disrupt the wireless and cable industries should it gain regulatory approval. “The proposed T-Mobile merger would serve as a lifeboat for Sprint, alleviating the company’s long-term financial challenges, including its high debt load and struggles to generate positive net income,” said TBR Telecom Analyst Steve Vachon. “The scale gained from Sprint’s operations would also enable T-Mobile to compete more aggressively in the 5G era and strengthen its margins, which historically have trailed those of Verizon and AT&T.”

The proposed T-Mobile and Sprint merger would also disrupt the cable and pay-TV industries, as the combined company would have a base of over 125 million wireless subscribers to which it could cross-sell T-Mobile’s upcoming Layer3 TV video platform. The combined company’s 5G services may also serve as a replacement for traditional wireline broadband connectivity as the combination of T-Mobile’s and Sprint’s spectrum would yield estimated speeds of 450Mbps on a national average.

Combined wireless revenue among Tier 1 Canadian carriers rose 8.8% year-to-year to $6 billion due to continued postpaid additions spurred by shared data programs and higher data usage arising from the accelerated speeds offered by LTE-Advanced services. Despite steady increases in smartphone penetration in Canada, the postpaid market continues to flourish as Rogers and Bell Mobility reported their highest first quarter postpaid net additions in 1Q18 since 2009 and 2011, respectively. Subscriber growth will remain strong throughout 2018 as prepaid customers transition to postpaid plans with higher average revenue per user (ARPU) and as connected device adoption increases in Canada. Carriers will also have the opportunity to target first-time wireless customers in Canada, including youths and young adults as well as immigrants entering the country.

The U.S. & Canada Mobile Operator Benchmark details and compares the activities of the largest U.S. and Canadian operators, including financial performance, go-to-market initiatives and resource management strategies. Covered companies include AT&T, Verizon, Sprint, T-Mobile, U.S. Cellular, Rogers, Telus and Bell Mobility.


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