US Mobile Market Update

Highlights of the US Mobile Market Q1 2016

US Mobile Market Update – Q1 2016 – Credit: Chetan Sharma

Mobile data revenues increased by 17% YoY and now contribute 73% of the overall service revenues.
QoQ, the service revenues declined again for the third straight quarter.
The overall ARPU dropped below $40 for the first time.
The Capex is likely to contract for a third year in a row given that most of the LTE networks are built out and there is pressure to preserve the margins.
Device revenues declined sharply as consumers are upgrading at a slower pace than before and new device launches haven’t really motivated consumers to upgrade.
EBITDA and Net Income saw double digit gains indicating operators are running a much tighter ship than before.
Churn is at historic lows. Despite all the commotion in the market, fewer customers are churning each quarter.
US will cross 400M in subscriptions in 2016.
The data prices remained pretty stable throughout Q1.
Mobile data traffic grew again with per sub smartphone consumption going past 4.0 GB/user/mo however, overall data traffic is expected to slow down in 2016.
In the first 4-5 months of Binge-on, T-Mobile users chomped away over enough PBs of data for free to account for almost entire data traffic for the operator in 2013. T-Mobile experienced a net traffic reduction of 10-15% but given that consumers are consuming 3x than before, overall traffic is likely to rise again.
AT&T continues to add more connected cars than rest of the operators combined. The operator is optimizing its business around profits. One side-effect of this has been a decline in postpaid phone net-adds for the sixth straight quarter.
Verizon’s IoT/Telematics accounted for $195M in Q1 and is likely to cross the $1B mark in 2016 making US the hotbed forConnected Intelligence activities, growth, and continued experimentation.
Apple again dominated the device market with over 39% revenue share, 74% profits share however it saw its quarterly YoY growth saw a decline for the first time in 13 years. The law of large numbers is starting to catch-up. Apple needs a new market narrative and/or another blockbuster. Given the pickup in R&D spend, speculators are hoping for the iCar to surface but it could be something as pedestrian as a new iPhone.
Apple’s services business was greater than Facebook’s Q1 revenue but in context of its $50B quarter, Wall Street doesn’t appreciate the 20% increase in services revenue. Street’s eyes are squarely positioned on the iPhone numbers.
Intel abandoned its existing wireless efforts leaving its future strategy and its role in the ecosystem a big question mark.
Android ecosystem revenues and profits improved slightly primarily on the back of Samsung’s quarterly results. Sony, HTC, LG and some other Android players suffered deep losses in Q1.
Operator tablet net-adds growth declined sharply.
AT&T and Verizon on average made $17 per sub/mo, T-Mobile stayed into positive territory with $2 profit/sub/mo while Sprint eked out a 20c profit.

We will be doing an in-depth analysis of the future of the mobile industry at our 7^th annual mobile executive summit Mobile Future Forward in Sept 2016.