US Mobile Market Update - Q3 2018

https://www.chetansharma.com/publications/us-mobile-market-update-q3-2018/

5G Industry Transition – We have worked on every single G transition. Now that we are moving into the 5G cycle, we are heavily involved with players across the ecosystem and around the globe from very advanced markets to just emerging. Chetan Sharma Consulting is involved in several 5G strategic projects across three continents, across the value chain, so, have a front row seat into what’s coming. We have penned 9 research papers on 5G already, many of them industry firsts, and have several in the works for the coming months and years based on what we are learning from our work on the ground.

Highlights of the US Mobile Market Q3 2018

·        Buoyed by lack of cut-throat competition, Q3 showed a big jump in overall revenues for the operators. The US mobile revenues in Q3 18 grew by 6.34% - the highest growth figure in almost 3 years.

·        Postpaid revenues increased and reached the levels seen two years ago.

·        AT&T became the first US operator to cross the 150M sub mark becoming the 8th operator in the world and first operator in Americas to do so.

·        T-Mobile-Sprint merger is making its way through the regulatory approval process. (see more discussion below).

·        Verizon launched its version of 5G with great fanfare setting up the marketing and positioning battles for the next 12 months.

·        The 5G discussions are getting louder and more substantive with each passing day. However, it is the first “G” transition when net-revenues is under pressure so presents a unique set of issues to the industry. (more 5G commentary below)

·        Postpaid ARPU increased slightly as a result of softening of the price wars and consumer’s willingness to pay more in a healthy economy. However, because of the influx of non-phone devices into the mix, overall ARPU was down 1% YoY.

·        AT&T had the most number of connected devices net-adds in a quarter in industry’s history (breaking its own previous records over the past several years).

·        AT&T also added the most number of connected cars in the history of the industry. Its total tally stands at 27M connected vehicles.

·        Smartphone penetration stood at 95%.

·        The quarter continued to see the decline in tablets indicating waning interest from consumers in the segment. In aggregate, operators haven’t added a new tablet sub in the last 7 quarters. All three quarters so far have seen the decline in tablet net-adds. This might have implications to the 5G strategy for OEMs.

·        The decline in tablets has been picked up by connected smart watches. Apple Watch has been the sleeper hit for 2018.

·        Connected cars and IoT continue to dominate the net-adds. Their share of the net-adds was over 74%.

·        Again, connected vehicles was the biggest net-adds category for the quarter which was dominated by AT&T.

·        While the operators struggled to maintain growth, the overall wireless market is growing rapidly thanks to the continued explosion on the 4th Wave by new digital players.

·        Verizon’s IoT/Telematics business has made good strides over the last few years but the growth seems to have slowed down a bit.

·        Net Income was flat. Income/sub/mo gained as operators have tightened their belts and have improved their profitability despite pressure on revenues. All operators improved their profitability.

·        Industry capex is expected to grow slower than expected in 2019 though a lot will depend on the competitive dynamics in 1H19 and operators may yet boost their spend beyond the current guidance. Infrastructure vendors are benefiting from the current 5G cycle. Capex and Opex both increased in Q3. Sprint continues to boost its spending, but the biggest jump was experienced by Verizon.

·        On the back of connected devices, AT&T led the industry in net-adds. T-Mobile as usual dominated the most important category of postpaid net-adds.

·        The overall industry upgrade cycle is over 3 years now.

·        In the race to a trillion, as we predicted, Apple became the first company to cross the milestone. Amazon, Microsoft, and Google also reported excellent earnings. Amazon is likely to be the first one to the $2 Trillion landmark barring the impact of potential regulations.

·        The average data consumption in the US is expected to cross 8 GB/mo by the end of 2018.

Other topics covered in the research update:

·        Verizon’s 5G Launch. Does it matter?

·        Dawn of the 5G Era. What should we expect in 2019?

·        Revenue models for 5G

·        Is 5G a race? Or just Noise?

·        Evaluating Competition in the Digital Economy

·        The Race for the 5G icon

·        5G – Known Knowns and Known Unknowns

·        Mobile Future Forward Summit Recap

·        The rise of connected wearables and the decline of tablets

·        Will T-Mobile/Sprint merger go through?

·        5G Marketing and Positioning

·        Mobile Data Growth: What’s Next?

·        MAGAF’s dominance

·        Estimating 5G data demand

·        Realizing the 5G Promise

·        5G as a platform

·        5G Economics

·        The shifts in Net-adds

·        What to expect in the coming months?

·        US Wireless Market Q3 2018 Analysis

o   Service Revenues

o   ARPU

o   Subscribers

o   4th Wave Progress

o   Connected Devices

o   Handsets

Editorial Note: Chetan Sharma Consulting Research Papers and Quarterly Updates have long shaped the industry dialog. Based on reader feedback and demand, we are pleased to announce that the papers and updates are now available as part of the subscription service. We will also be launching a quarterly 5G newsletter for subscribers to keep you abreast of the latest trends and analysis.