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US Wireless Operators' Q2 2015 Scorecard

Sarah Thomas
8/5/2015
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The gaps between AT&T and Verizon and T-Mobile and Sprint remains large, but T-Mobile was the clear-cut winner in the US wireless operators' most recent quarterly earnings.

Not only did it surpass Sprint Corp. (NYSE: S) in overall subscriber numbers, but T-Mobile US Inc. also blew past the other three wireless operators in the all-important metric of postpaid phone additions in the quarter. It added 760,000 in its fiscal second quarter, while the next closest -- Verizon Communications Inc. (NYSE: VZ) -- added less than half at 321,000. Both Sprint and AT&T Inc. (NYSE: T) lost postpaid phone customers in the quarter, at -12,000 and -32,000, respectively.

Here's a snapshot of how the big four fared in the fiscal second quarter (first quarter for Sprint) in terms of both their customer additions and financials:

Table 1: US Tier One Wireless Operators Q2 -- Customers

Total Net Customer Adds Postpaid Growth Prepaid Growth Postpaid Phone Net Adds Postpaid Phone Churn Total Connections
AT&T 2.14 million -410,000 -190,000 -32,000 1.01% 123.9 million
Verizon Communications 1.42 million 1.134 million -126,000 321,000 0.90% 109.5 million
Sprint (Q1) 675,000 310,000 -366,000 -12,000 1.56% 57.7 million
T-Mobile 2.1 million 1 million 178,000 760,000 1.32% 58.9 million
Source: AT&T, Verizon, Sprint & T-Mobile earnings reports

Table 2: US Tier One Wireless Operators Q2 -- Financials

Total Wireless Revenue Year-over-Year Change Wireless Service Revenue Year-over-Year Change Net Income
AT&T $18.3 billion 2.1% $15.1 billion -0.20% $4.68 billion
Verizon Communications $22.6 billion 5.3% $17.7 billion -2.20% $4.23 billion
Sprint (Q1)  $8.02 billion -8.75% $7.03 billion -7.60% -$20 million
T-Mobile $8.2 billion 14% $6.1 billion 12% $361 million
Source: AT&T, Verizon, Sprint & T-Mobile earnings reports

Quite rightly, T-Mobile talked up both its smartphone adds in the quarter and its wireless revenue growth, which grew 14% year-on-year, while Verizon comes in at 5%, AT&T at 2% and Sprint in the red. And, unlike its competitors, T-Mobile's growth is based largely on lucrative smartphones, not tablets or Internet of Things connections.

Jackdaw Research analyst Jan Dawson points out in a blog post that the key to T-Mobile's growth is the combination of low churn and high subscriber additions. T-Mobile's churn has fallen from 2.5% in 2012 to 1.3% now. And, while it's in line with AT&T and Verizon, it ends up being less significant given its smaller subscriber base.

"The combined effects of T-Mobile's falling churn and its relatively small base give it a significant advantage over AT&T and Verizon (both of which have lower churn but much bigger bases) and Sprint (which has a very similar base but much higher churn)," Dawson explains.


For all the quarterly earnings from the US and Europe, visit the mobile content section
here on Light Reading.


T-Mobile's turnaround is clearly in full swing -- and it's working. For the uncarrier, it is a question of whether it can keep the momentum going and continue to improve its financials while still on-boarding new customers. As Dawson points out, subscriber growth and retention may not look as good as its customer base grows.

Sprint, on the other hand, is only at the start of its turnaround. For Sprint, it's simply a question of execution. Sprint's alleged amazing, spectrum-dense network has always been a "coming soon" attraction, but everyone -- customers, investors, etc. -- are getting antsy. Its Next-Generation Network has to be the network to right the ship, and it needs to happen now. With SoftBank Corp. CEO Masayoshi Son making an appearance on the carrier's earnings call, a new management team in place and the investments lined up, it would appear Sprint finally sees the urgency.

Sprint CEO Marcelo Claure was also singing a different tune on Twitter, where he's (more than once) gotten in a spat with T-Mobile CEO John Legere in the past. After Sprint's earnings today, rather than respond to a Legere prod, he told the CEO he deserves credit. "Much respect. Now focused on customers not rankings. Congrats. #movingforward," the CEO tweeted.

For all the second-quarter earnings coverage, see:

— Sarah Thomas, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Editorial Operations Director, Light Reading

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AccountD32652
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AccountD32652,
User Rank: Light Beer
8/10/2015 | 11:00:30 PM
Do you have this for previous quarters?
Supremely useful being able to see them side by side, especially the postpaid net adds number (since everyone, except T-Mobile, masks these with tablet adds in their financial statements)
AccountD32652
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AccountD32652,
User Rank: Light Beer
8/10/2015 | 10:59:35 PM
Re: Churn
Yes, all US wireless operators report churn as a "monthly churn" figure... 1/Churn is the average lifetime of a subscriber.

As Sarah mentions, prepaid churn is substantially higher (closer to the 4% - 5% range for T-Mobile I know).
Sarah Thomas
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Sarah Thomas,
User Rank: Blogger
8/5/2015 | 9:50:09 AM
Re: Churn
They are the average for all of Q2, but only for postpaid as prepaid tends to be a lot higher.
Director31454
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Director31454,
User Rank: Light Beer
8/5/2015 | 9:47:40 AM
Churn
Quick question, the Churn numbers, are they an average monthly % during Q2 or are they for the whole of Q2?
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