U.S. operators will improve service revenue in 2H18 via continued subscriber growth and adoption of premium unlimited data plans

HAMPTON, N.H. (Sept. 11, 2018) — Wireless revenue rose 2.4% year-to-year to $59.1 billion among U.S. carriers covered in Technology Business Research Inc.’s (TBR) 2Q18 U.S. & Canada Mobile Operator Benchmark. The increase came as a result of higher equipment revenue spurred by the adoption of premium devices as well as improving service revenue trends. Verizon and AT&T (when excluding the impact of the ASC 606 revenue recognition standard) were able to return to year-to-year service revenue growth in 2Q18 as the bulk of customers have transitioned to nonsubsidized service plans. Service revenue is also benefiting from customers migrating from lower-priced tiered data plans to more expensive unlimited data plans and will be further aided by the recent launch of new premium unlimited data tiers, such as Verizon’s Above Unlimited and Sprint’s Unlimited Plus plans.

Graph depicting 2Q18 wireless revenue, OIBDA margin and year-to-year growth

Service revenue will also benefit from U.S. operators sustaining smartphone and connected device subscriber growth in 2H18. “Despite growing smartphone saturation, all Tier 1 U.S. operators were able to gain postpaid phone net additions in 2Q18 as opportunity remains to target first-time wireless customers, including young adults and immigrants entering the country,” said TBR Telecom Analyst Steve Vachon. “Postpaid phone subscriber growth is also coming at the expense of prepaid growth, which is slowing as more customers qualify for postpaid plans as the economy improves. Operators are also expanding their connected device portfolios in areas including wearables and connected car to bolster postpaid subscriber growth. The Apple Watch 3 has particularly bolstered postpaid connections as the device is the first Apple Watch model capable of receiving LTE connectivity.”

Combined wireless revenue among Tier 1 Canadian carriers rose 5.1% year-to-year to $6.2 billion due to continued postpaid additions spurred by shared data programs and expanding LTE-Advanced coverage. The postpaid market in Canada continues to flourish, with Bell Mobility and Rogers increasing postpaid net additions year-to-year in 2Q18, in part due to the country having a significantly lower wireless penetration rate, which is currently estimated at about 87%, compared to the U.S. Canadian operators are also bolstering postpaid subscriber growth by providing low-cost connectivity options to support connected devices, including tablets and wearables, as part of their shared-data family plans. Competitive pressures are challenging average revenue per user (ARPU), however, as Bell Mobility and Telus experienced year-to-year blended ARPU declines in 2Q18 as the companies priced more aggressively to maintain market share. ARPU declines were also driven by Tier 1 Canadian operators offering targeted promotions to combat aggressive pricing offers from regional companies such as Videotron and Shaw’s Freedom Mobile brand.

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.

For additional information about this research or to arrange a one-on-one analyst briefing, please contact Dan Demers at +1 603.929.1166 or dan.demers@tbri.com.

 

ABOUT TBR

Technology Business Research, Inc. is a leading independent technology market research and consulting firm specializing in the business and financial analyses of hardware, software, professional services, and telecom vendors and operators. Serving a global clientele, TBR provides timely and actionable market research and business intelligence in a format that is uniquely tailored to clients’ needs. Our analysts are available to address client-specific issues further or information needs on an inquiry or proprietary consulting basis.

TBR has been empowering corporate decision makers since 1996. For more information, please visit www.tbri.com.

 

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