LIVE FROM GSMA MOBILE 360 NORTH AMERICA 2015: The four major operators in the US have seen total revenues “buoyed” by an industry wide shift away from handset subsidies and towards equipment instalment plans, according to GSMA’s Mobile Economy 2015 report.
The shift, GSMA said, is now leading to a more distinct separation for both the consumer and operator between service and equipment revenues, with the former markedly slowing over the last 18 months, and turning slightly negative at the end of last year.
This however is not reflective for total revenues, which in Q2 2015, for the top four operators, grew by 4.3 per cent, while service revenues grew at 0.4 per cent year on year, showing that “a substantial gap remains”.
“The differential between total and recurring service revenue growth will eventually equalise as a great percent of the base moves to instalment or SIM only plans,” read the report (click to enlarge image, left).
For the operators, the shift will mean lower handset subsidies and higher operating margins, while consumers will have more flexibility with their contract arrangement, or indeed no contract at all.
The ‘uncarrier’
GSMA noted T-Mobile US remains the most disruptive of the four US operators, reflected by its recent financial performance, while its acquisition of low end market operator MetroPCS in 2013 continues to prove beneficial.
The two largest players, Verizon and AT&T, have however not “been as significantly affected by T-Mobile’s disruptive tactics as Sprint has”.
The SoftBank-owned company, which lost its number three position to T-Mobile US earlier this year in terms of connections, also had “by far the lowest” recurring revenue growth over the past year.
GSMA said AT&T and Verizon appear to have opted “not to compete too aggressively for market share of connections, reflecting the maturity of the market”.
In keeping with a shift in carrier strategy, both companies have been withdrawing from subsidies from most handsets and encouraging subscribers to upgrade with equipment instalment plans.
“This reflects what appears to be a conscious choice to focus on maintaining cash flows and a stable operating performance, rather than risk a further deterioration in the competitive environment,” said the industry body.
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