The wireless sector enjoyed its biggest quarter-over-quarter jump in service revenue in five years, according to Chetan Sharma Consulting. The good news extended to all four major carriers, with T-Mobile leading the way with 7% growth.
The dynamics of the industry are perhaps led by the fact that the transition to 5G is getting real. This includes the promulgation of standards, 5G tests and densification efforts. It is a different scenario than in past technology shifts, Sharma writes. "[I]t is the first 'G' transition when net-revenues is under pressure so presents a unique set of issues to the industry," according to Sharma.
The firm found that AT&T had the most connected device net-adds in a quarter in the industry's history, breaking its own record. Other noteworthy results from the research:
- Smartphone penetration is at 94%.
- The decline in tablets sales continued. This may impact OEM's 5G strategies.
- The dominant net additions are connected cars and the IoT. Combined, the overlapping groups represented 77% of net adds. AT&T dominated the connected cars segment during the quarter.
- The industry experienced record low churn.
- Data consumption in the U.S. will be more than 8 GB per month by the end of this year.
- Overall ARPU increased slightly due to a "softening of the price wars" and easier consumer spending as the economy improves. However, the entry of more non-phone devices led to a year-over-year ARPU decline of 4%.
- The upgrade cycle for the industry now is three years.
The success of T-Mobile in this environment is noteworthy, especially as it works to finalize the Sprint merger. This week, the carrier said that it expects to acquire more customers during 2018 than it previously predicted. It predicts between 3 million and 3.6 million new branded postpaid net customer additions, a significant increase from earlier guidance, which put the gains between 2.6 million and 3.3 million.
The report suggests that the industry is in transition, but that it is successfully integrating new players and technologies. Sharma points to "4th Wave" digital players. The report says that net incomes rose 10% and that per-subscriber per-month income rose as operators "tightened their belts and have improved their profitability despite pressure on revenues. All operators improved their profitability."
Capex—perhaps driven by densification—rose during the quarter, with Sprint's expenditures passing $1 billion for the first time in 11 quarters. Opex, on the other hand, was 11% lower.