Mobile Week in Review

The nation’s top three wireless service operators released the results of their busy Q2 operations. Here is Circana’s quick take on the major trends coming out of the financials: 

• T-Mobile continues to expand postpaid base: T-Mobile once again led the industry with the addition of 777K new postpaid phone lines, up from 760K in the year-ago-quarter. This was a Q2 record for T-Mobile and the carrier noted that 140K of these new postpaid users were not new to the T-Mobile network as they migrated over from the Metro prepaid service. Despite the prepaid to postpaid migration, T-Mobile managed to grow its prepaid base by 179K after losing around 50K subscribers in the previous quarter. The carrier does not release its enterprise base data, but the management credit their growing enterprise business aiding the record growth enjoyed in Q2 2024. This was also the first quarter the carrier published the subscriber figures from its acquisition of the Mint Mobile business. T-Mobile’s prepaid base now includes the 3.5 million users from the acquisition; the carrier leads the prepaid segment with over 25 million customers. The revenue impact of the acquisition of Mint Mobile, however, was not as glowing as the carrier saw a notable drop in prepaid ARPU (from $37.98 in Q2 2023 to $35.94 in Q2 2024) given Mint Mobile’s low-cost positioning.
• Verizon builds on the value proposition: Verizon’s postpaid phone net adds performance continued to improve as the carrier added 148K new users, up from only 8K in the year ago quarter. The growth was driven by the enterprise unit as it offset the 8K decline seen in the consumer postpaid phone base. Verizon’s consumer business is in fact on a positive rhythm as the carrier’s consumer postpaid phone losses were substantially bigger (136K) in the year ago quarter. This improvement is not surprising as Circana has long commented that Verizon clients had been showing a lower propensity to churn to other providers because of its new “value” marketing strategy relying on simplified and affordable a la carte service options and aggressive device subsidies. The carrier’s performance in the prepaid segment, on the other hand, continued to deteriorate as it lost a record 625K subscribers in the quarter. There is, however, reason to be optimistic as almost all the customer deactivations in prepaid came from the low-ARPU Safelink brand, which serves the Affordable Connectivity Program (ACP) that will soon disappear due to lack of funding (hence the high churn in Q2 2024). The deceleration of churn in Verizon’s main prepaid brands should continue if the FCC’s upcoming vote on the device unlocking policy favors Verizon’s stance. The carrier has not been able to match competitors’ discounts on prepaid phones as it is enforced to unlock all phones within 60 days of activation.
• Enterprise helps AT&T maintain the strong momentum: AT&T had another strong quarter with 419K new postpaid phone subscribers compared to 326K net adds recorded in the year ago quarter. This performance initially took us by surprise as Circana’s Connected Intelligence Mobility survey conducted earlier in February revealed that AT&T customers had a higher propensity to churn new networks due to various reasons such as service cost or lack of content bundles. However, AT&T executives attributed the strong quarterly performance in postpaid phone adds to the success of enterprise segment, which was able to attract new first responder connections. AT&T’s prepaid performance was not as impressive as its postpaid trajectory as it added 82K new prepaid lines, 35K of which were phone lines versus 167K prepaid lines (123K were phone lines) added in the year ago quarter. Nevertheless, AT&T continues to gradually grow its prepaid base when the overall prepaid segment continues to contract.
• Consumers continue to postpone smartphone upgrades: Half of consumers surveyed by Circana have repeatedly cited plans to cut back on spending on mobile products and services and highlighting that they would primarily postpone their device upgrade for cost cutting. This behavior is clearly reflected in the postpaid device upgrade rates publicized by carriers, and it peaked in Q2 2024. Every carrier announced declines in postpaid upgrade rates (T-Mobile down from 2.6% in Q2 2023 to 2.3% in Q2 2024; AT&T down from 3.1% in Q2 2023 to 2.9% in Q2 2024; Verizon down from 3.5% in Q2 2023 to 2.9% in Q2 2024). We expect to see a reversal of this trend beginning September as the expected interest cuts will help carriers to get more aggressive in subsidies on Apple’s upcoming AI-powered iPhone 16 series phones.
• Carriers charge full throttle with FWA: T-Mobile and Verizon’s 5G-based FWA Home Internet service client base reached 7.8 million customers at the end of 2023. Since then, the two carriers added 1.6 million new customers for their home/work internet service. T-Mobile added 406K new connections, which slightly down from its performance in the year ago quarter (509K) new connections. The slowdown in growth rate is something that Circana previously predicted in our Q4 2023 financial analysis as T-Mobile increased its service pricing for the service in early 2024. Verizon, on the other hand, added another 378K new consumer and enterprise customers for its FWA service in the latest quarter (almost the same as Q2 2023’s 384K additions). AT&T, which joined the game late (in Q3 2023) with its Air Internet FWA service, added another 139K new subscribers, bringing its total FWA user base to 359K subscribers.