High wireless subscriber growth unsustainable, according to analysts

As 2022 gets underway, US wireless service providers are showing mostly positive financial metrics. However, analysts are expecting a slowdown in the coming months.

"Industry [customer] net adds continued at very high levels, although we expect these to slow in 2022, as they aren't sustainable, in our view," wrote the financial analysts at Evercore in a recent note to investors. Specifically, they noted that the big wireless providers in the US collectively added 3 million net new postpaid phone subscribers in the fourth quarter of 2021, bringing total 2021 industry net customer additions to 9.4 million. But they said that kind of growth likely wouldn't continue.

Evercore's outlook dovetails with the expectations of other analysts. In general, US wireless providers have been adding an outsized number of new customers each quarter for various reasons, ranging from government stimulus checks to migration of prepaid customers onto postpaid plans. But most forecasters expect that growth to slow during 2022.

Figure 1: Evercore expects top US wireless providers to add fewer new customers in the coming quarters than in recent periods. Click here for a larger version of this image.
(Source: Evercore)

Evercore said that it expects the US wireless industry to add around 7.7 million net new postpaid phone customers during 2022.

As industry growth slows, the analysts said that they expect cable companies and T-Mobile to come out on top. Specifically, they forecast that cable companies like Comcast and Charter will capture 32% of new customer net additions in 2022, up from 25% in 2021. For T-Mobile, the analysts predict that the company will increase its share of industry net customer additions to around 40% in the second half of 2022, up from around 30% in the second half of 2021.

Figure 2: Evercore expects cable companies and T-Mobile to grow their share of industry-wide net new customer additions in 2022. Click here for a larger version of this image.
(Source: Evercore)

As customer growth slows, the Evercore analysts are also predicting a corresponding decrease in most operators' wireless service revenue growth. They wrote that, overall, operators grew wireless service revenues by 5.2% in the fourth quarter of 2021 compared to the same period in 2020, largely due to the huge influx of new customers. However, they warned that such growth would likely slow in the coming months.

Figure 3: Evercore expects a slowdown in operators' revenue growth from wireless services throughout 2022. Click here for a larger version of this image.
(Source: Evercore)

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