Highlights of the US Mobile Market Q1 2016
- 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 7th annual mobile executive summit Mobile Future Forward in Sept 2016.
Mobile Market Update – Q1 2016 http://www.chetansharma.com/usmarketupdateq12016.htm