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5G good times should continue through Q1 – analysts

Despite concerns that wireless growth will slow, at least one analyst firm is predicting that the nation's big 5G providers will report significant customer gains in the first quarter of this year.

"We expect a solid start to 2022 for the Big 3 wireless operators [AT&T, Verizon and T-Mobile] with an estimated +960,000 postpaid phone adds for the quarter," wrote the financial analysts at Morgan Stanley Research in a note to inventors this week.

That figure is close to the 1.2 million postpaid phone customer gains the market's three big providers collectively raked in during the same period a year ago. "Despite fears that we are set for a sharp slowdown in postpaid phone [customer] adds after a very strong 2021, carrier commentary suggests that this year's industry growth should only be modestly below last year's levels," the analysts wrote.

The relatively rosy expectations dovetail with the performance of the broader US economy. Despite signs of inflation and a war in Ukraine, jobs growth remained relatively robust in the early months of 2022. Further, the Morgan Stanley analysts noted that operators likely will see rises in their international roaming revenues as the summer travel season heats up.

Broadly, the developments appear to have somewhat tempered worries that US wireless providers would see a sharp drop off in the impressive customer growth rates they reported throughout 2021. That's noteworthy given the emphasis that Verizon, AT&T and T-Mobile have placed on their new 5G networks during the past few years. Indeed, T-Mobile recently reported that more than 40% of its postpaid phone customers have a 5G device, and that its 5G network already handles roughly half of all its customers' data traffic.

AT&T, Verizon and T-Mobile are expected to report Q1 results either later this month or early next month.

An AT&T technician installs a 5G radio. (Source: AT&T)
An AT&T technician installs a 5G radio.
(Source: AT&T)

And, perhaps more importantly, all of the nation's big 5G providers have reported significant demand for their premium 5G service plans. Those expensive plans have helped raise operators' average revenues per user (ARPU) during the past year or so – and the Morgan Stanley analysts believe this trend ought to continue through the first quarter of 2022.

Picking winners

But which operator is expected to rake in the most new customers during the first quarter of this year? According to the Morgan Stanley analysts, that would be T-Mobile. "We expect T-Mobile's +593,000 postpaid phone adds to modestly exceed AT&T's +417,000, although AT&T has beaten street net add forecasts for several quarters. Verizon will likely see their typical 1Q modest loss in subscribers, we are at -49,000," the analysts wrote.

Finally, the analysts weighed in on the latest big new development in the mobile industry: fixed wireless access (FWA). Both Verizon and T-Mobile are expanding the sale of wireless-delivered, in-home Internet services to consumers and businesses, and have begun reporting sizable customer growth. In the fourth quarter of 2021, the US FWA market captured about 38% share of total broadband industry net customer additions, according to a recent market analysis from MoffettNathanson.

"This quarter should see another sequential improvement in FWA adds, while the cable companies continue to target significant wireless share gains," wrote the Morgan Stanley analysts. They predicted that Verizon and T-Mobile will report a combined 400,000 new FWA customers during the first quarter, up from the roughly 300,000 they reported in the fourth quarter of last year.

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Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano

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