Covid-19 has affected wireless subscriber trends, though not adversely.
In the era of increasing digital communications, wireless carriers should not be affected adversely, even in an economic turmoil. The wireless subscriber growth in particular, is not likely to see any major growth or havoc in the short term. As the 5G bandwidth becomes more significant in the future, the growth may accelerate, although at its own speed. That said, it can be seen that the Covid-19 pandemic has put the economy in a slightly unstable condition. The impact could be seen beginning in March, when companies and retailers had closed their shops and outlets, leading to a laggard economy. In the wireless telecom sector, the three leading providers have added approximately 270,000 wireless subscribers in total, as compared to 1,000,000 in the same quarter in the previous year, with AT&T Inc losing about 114,000 wireless subscribers.
|AT&T (excl. Reseller & Connected)||92927|
|AT&T (incl. Reseller & Connected)||171407|
|US Cellular Corp||4919|
|Tim participacoes sa||52,031|
|Telphone & Data Systems inc||4868|
The wireless services act as a support and are a huge reason why this industry is relatively stable, since the big three rely majorly on wireless subscriber-based operations. The wireless services account for 40% for AT&T Inc, approximately 70% for Verizon Communications, and a whopping 100% for T- Mobile, making it relatively stable compared to other sectors.
During the second quarter of 2020, the average revenue per user (ARPU) decreased for most of the companies compared to the previous quarter, owing majorly to a fall in roaming charges. QoQ decline of AT&T Inc and Verizon Communications were approximately 1.1% and 1.7% respectively, while T- Mobile grew by 1.65%, where this growth can be attributed to the merger with Sprint Corporation in April, 2020.
The postpaid wireless subscriber count underwent a fall in the second quarter as the pandemic induced people to stay indoors, leading to less additions that would normally be generated from in-store operations. As for the prepaid subscriber section, there was not much of a fall compared to the previous quarter in most of the wireless services companies. As a matter of fact, there was a significant growth in AT&T Inc and Verizon Communications, while there was a fall in the prepaid wireless subscriber count for T- Mobile. Net prepaid additions QoQ for AT&T Inc were about 200,000 compared to 5,000 in the previous quarter ended 31 March 2020 and approximately 406,000 year-on-year. Verizon Communications witnessed an increase of 18,000 subscribers QoQ compared to a decrease of 83,000 in the previous quarter.
If we look at the net additions of the telecom subscribers (including prepaid and postpaid), AT&T Inc witnessed a decreased growth QoQ, and an approximate equal growth YoY. Verizon Communications recorded an 81,000 gain in subscribers as compared to a loss in the previous quarter and a yearly growth of about 79,000 wireless subscribers. As for T- Mobile, the total wireless subscribers spiked by 29,784,000 QoQ and a 32,344,000 YoY growth owing to the merger with Sprint Corporation.
T- Mobile Merger with Sprint has changed outlook of the industry
In April, 2020, T- Mobile announced their merger agreement with Sprint Corporation, bringing the four leading wireless carriers in the United States down to three. This event has lodged a sense of uncertainty as to the future of this industry and its leading players. We believe that this merger will surely lead to a relaxation in the red ocean strategy related competition in the telecom sector. However, T-Mobile now has an increased volume of resources, with which it may introduce competitive prices.