Author(s): Kester Mann
In the excitement of Mobile World Congress, the everyday business of financial reporting can get overlooked. In the US, the last set of results from the big four mobile operators emerged in the days before the event in Barcelona. As the frenzy of the industry's annual showcase dies down, I thought I'd share my highlights from each disclosure.
Troubled Sprint issued the most upbeat set of results and two metrics stood out for me: strong net additions among post-paid mobile phone customers, and growth in the carrier's earnings before interest, taxes, depreciation and amortization (EBITDA).
The first statistic indicates that Sprint's promotions are resonating with US consumers. In November 2015, it introduced what it claimed to be the "biggest wireless offer in US history", with rates that were half those of most Verizon, AT&T and T-Mobile plans. Despite launching the plan mid-quarter, Sprint saw 366,000 new post-paid phone customers in 4Q15, turning around a net loss of 205,000 a year earlier. This was ahead of AT&T and only slightly behind Verizon.
Sprint recently extended this offer until the end of March 2016, so it should see another boost in its next set of results. However, the offer can't last forever and the damage on revenue and margins could soon become apparent.
In the second metric, huge cost savings helped EBITDA up a massive 82 percent. Sprint's parent SoftBank is keen to make deep cuts to help turn performance around and is in the process of axing thousands of jobs.
AT&T's results were overshadowed by trouble in its business solutions sector, which represents nearly 45% of total revenue. Total operating revenue in all market segments dipped after three consecutive quarters of growth.
Nevertheless, AT&T added another 1.2 million connected cars to its network during the quarter. This took its total to 7 million and reflects early investment in the area. A recent deal with Ford will result in a further 10 million connected cars over the next five years, according to the carrier.
Once again, T-Mobile reported strong customer acquisition numbers, with net additions above 1 million for an 11th consecutive quarter. However, impressive growth at the self-styled Un-carrier may have finally peaked. Net branded post-paid additions fell slightly from 4.9 million in 2014 to 4.5 million in 2015, and the company expects they could be as low as 2.4 million in 2016.
Source: T-Mobile USA
John Legere, CEO of T-Mobile USA, offered some interesting statistics about voice usage on the carrier's network. He said that Wi-Fi calling accounts for 5 percent and that voice-over-LTE accounts for 50 percent of voice calls on the network.
More details from Verizon about its recently-launched video service go90 had been eagerly awaited. The carrier is placing a substantial bet on generating new revenue from content and advertising and in 2015 acquired AOL in $4.4 billion deal. The need for this new approach was clear in its 4Q15 results: wireless service revenue fell for a fifth consecutive quarter, and equipment revenue growth slowed sharply.
Verizon is clearly in the video business for the long haul. Although CEO Lowell McAdam said that he was "encouraged" by early uptake, he admitted that go90 will not make a profit for around two years. However, he referred to big increases in marketing and content in the coming months. This would help the carrier build a large viewing audience, which would attract potential advertisers.
CCS Insight's Quarterly Market Analysis, Mobile Operators, US is published this week. For more information see here.