AT&T, Verizon set to suffer the most from US cable's mobile gains – analyst
Continued mobile subscriber gains by cable operators paired with an anticipated dip in overall industry subscriber growth will put a dent in the future growth prospects of US mobile incumbents, particularly for AT&T and Verizon.
That's the summation of a new report from MoffettNathanson analyst Craig Moffett that sizes up a mobile market that's expected to see continued gains by cable operators despite slower growth by mobile operators on an industry-wide basis.
Near-term, the wireless market appears to be growing fast enough for all of the mobile players. But longer-term, "growth so far in excess of population growth is clearly unsustainable," Moffett wrote.
Moffett's revised estimates call for mobile industry phone net additions to dip from about 6 million this year, to about 4.5 million (5.8 million postpaid net adds against a loss of 1.3 million prepaid subs) per year in the coming years.
And the pain for those incumbents will become more acute if the growth rate recedes from a recent spike of 2.5% year-over-year, to more moderate levels – down to about 1.4% by 2025, according to Moffett's forecast.
Last month, the analyst revised his wireless subscriber line projections for US cable operators on the heels of Comcast's new, more aggressive multi-line pricing, Comcast's and Charter's revised MVNO deals with Verizon, Comcast's recent revelation that its Xfinity Mobile business had achieved break-even status, and the coming use of licensed CBRS spectrum that's expected to improve the broader economics of cable's wireless business.
"Those subscribers have to come from somewhere," Moffett explained. "The wireless industry is more or less fully penetrated, so faster wireless growth at the cable operators means losses for the incumbents ... With Cable taking a bite out of that smaller pie, we expect incumbents' growth – AT&T and Verizon, in particular – to suffer."
The recent growth rate for US mobile, "has papered over a great many problems for the incumbents, not least the steady share gains captured by cable wireless," the analyst added.
Near term, he expects the industry's hyper-growth to continue as stimulus checks help drive a long-overdue upgrade cycle. But when that growth recedes, incumbents will "be left with all the costs of retention subsidies, but with a much less forgiving market for subscriber growth," Moffett explained.
Lowered estimates for AT&T, Verizon and T-Mobile
With all of those elements factored into the backdrop, Moffett has significantly lowered his estimates for postpaid phone net adds for both AT&T and Verizon. T-Mobile's sub growth will slow to a smaller degree, reflecting "greater competition from cable operators," Moffett wrote.
- AT&T: For 2022, Moffett has cut an original forecast of 1.05 million postpaid net adds, to net adds of 505,000. Looking to 2025, he has lowered an original forecast of 888,000 postpaid adds, to 261,000.
- Verizon: For 2022, the analyst cut original expected postpaid adds of 1.03 million to 673,000. For 2025, he now expects Verizon, which does benefit from Comcast's and Charter's mobile businesses thanks to the aforementioned MVNO agreements, to pull in postpaid adds of 306,000, versus an original 1.09 million.
- T-Mobile: For 2022, Moffett has reduced his original postpaid net adds of 2.93 million, to 2.73 million. For 2025, he has lowered T-Mobile's expected postpaid net adds to 2.97 million, versus an original 3.35 million.
Ahead of its national 5G network build, Dish Network remains largely a prepaid operator following its acquisiton of the Boost business from T-Mobile, along with a mix of pre- and post-paid subs coming from last year's Ting deal. Moffett expects to see a faster decline at Dish's Boost prepaid business as the company prepared to "compete more vigorously in post-paid."
- Cable's wireless biz 'ready for its star turn' – analyst
- Comcast gets aggressive with unlimited mobile 5G pricing
- Verizon inks 'expanded and extended' MVNO deals with Comcast, Charter
- Comcast's wireless biz turns the corner
- CBRS spectrum auction maps: Who won what, and where
— Jeff Baumgartner, Senior Editor, Light Reading
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