Mobile carriers end the year strong
Following T-Mobile’s preliminary announcement of 824K net postpaid subscriber additions in Q4 2020, AT&T and Verizon announced the full results of their financial and operational performances for the final quarter of the year. Verizon was the first to take the stage, announcing 279K new postpaid phone subscribers (a little over 40% of which were enterprise accounts), down from 790K recorded in the final quarter of 2019. Verizon also reported a loss of 50K prepaid subscribers. While this figure was below the 77K new prepaid additions recorded in the previous quarter, the carrier’s YoY prepaid performance showed an improvement considering the loss of 121K prepaid subs in the fourth quarter of last year. The carrier’s churn (0.96%) in the consumer business increased slightly from the previous quarters low levels (0.69% and 0.80%, respectively in Q2 and Q3 2020), but it was still lower than the pre-pandemic periods. AT&T, on the other hand, had another massive quarter with 800K new postpaid phone additions on top of the 645K new postpaid phone subs added in the previous quarter. The 10-year high Q4 postpaid phone net additions performance is also almost triple the figure (290K) in Q4 2019. The carrier also added 14,000 new prepaid subscribers during the quarter, though the carrier actually lost 40K prepaid phone subscribers and offset these losses by prepaid connected device gains. Incidentally, AT&T’s postpaid phone churn was recorded as 0.76%, which is the second-lowest rate ever recorded.
The NPD Take:
- AT&T shook the industry in late October when it announced the extension of its new iPhone subsidies to its existing customer base. This was an unexpected move as carriers have long been limiting the aggressive device subsidies to new comers and ignoring the existing upgrader base. With the largest postpaid iPhone penetration, AT&T was considered to take a significant hit in Q4 as its iPhone user base would be shopping around elsewhere to take advantage of the switcher offers. AT&T’s aggressive promotions not only help retain the base (keep the churn at near record-low levels) but also attracted customers from other carriers in Q4 2020.
- The prepaid sector enjoyed a short-lived Spring during the early stages of the pandemic when financially-challenged customers began seeking cost savings for their wireless services. Both AT&T and Verizon announced prepaid subscriber losses in the final quarter of the year as users upgraded to postpaid options to enjoy bundled streaming services (or went to smaller MVNOs that offer cheaper rate plans), but T-Mobile’s Q4 performance shows that there is still promise in prepaid. The Un-carrier added 84K new prepaid subscribers, up from 56K in Q3 2020 and 77K in Q4 2019.
Cable MVNOs continued to shine in Q4 2020
Comcast and Charter announced the results of their Q4 2020 operations. Both cable MVNOs continued to ride the momentum they have been enjoying for the past several quarters, and ended the year with a cumulative 560K new mobile subscribers. Charter’s Spectrum Mobile, which had previously hit the 2 million subscribers mark in Q3 2020, added another 315K mobile lines during the quarter. Spectrum Mobile’s quarterly revenues increased by 81% YoY, while the annual revenue growth was 87%. Charter also announced that it built 180 new retail store locations in 2020. Comcast, on the other hand, ended the year with 2.8 million mobile subscribers, 246K of which were added in the final quarter of the year. Comcast sat its Q4 and annual mobile revenues grow by 36% and 35%, respectively in 2020.
The NPD Take:
- 2020 has been a pivotal year for cable MVNOs Xfinity Mobile and Spectrum Mobile as they
have outshined the market during the pandemic period as their Achilles’ Heel, the limited retail footprint, became less of an issue due to mobile carriers’ retail store closures. Charter’s expansion of its retail footprint is significant because NPD’s channel research shows that despite the pandemic shifting sales from brick&mortar to digital, the recovering retail sales in Q4 and the boost in telesales/curbside pick-ups indicate mobile phone shoppers’ desire for in-person sales assistance.
- Xfinity Mobile and Spectrum Mobile’s continued subscriber growth is somewhat driven by their pay-by-the-gigabyte service model that has proven to be quite attractive considering the heavy reliance on Wi-Fi during the pandemic. The cable MVNOs could have added more subscribers to their bases should they have played the heavy subsidy game on the new iPhone 12 models in November and December 2020.