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T-Mobile’s Postpaid Customers Contributed More per Unit in 2Q15

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T-Mobile’s average revenue per user in 2Q15

In the earlier parts of this series, we learned about T-Mobile’s (TMUS) significant revenue growth in 2Q15. Revenue increased by ~13.8% YoY (year-over-year) to ~$8.2 billion during the quarter. We learned that this solid growth was driven by both service and equipment revenue. We also learned about how robustly the carrier’s postpaid subscriber base grew in 2Q15.

In this part, we’ll consider the unit contribution of T-Mobile’s postpaid customers. T-Mobile’s postpaid phone ARPU (average revenue per user) declined by a marginal ~2.3% YoY to $48.19.

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According to the company, after setting aside the impact of certain nonrecurring items, its postpaid phone ARPU declined by ~4% YoY in 2Q15. One of the reasons for this reduction is the increasing take-up of the telecom company’s Simple Choice plan. Some promotional family plan offers also negatively impacted the YoY growth of T-Mobile’s postpaid phone ARPU during the quarter.

Unit contribution of T-Mobile’s postpaid customers in 2Q15

On the positive side, postpaid ABPU (average billings per user) grew modestly YoY during 2Q15. It increased by ~5.9% to ~$63.29. After adjustments for nonrecurring items, growth was ~5% YoY.

ABPU includes both service revenue and the installment payments by postpaid customers. You should note that installment billings fall under equipment revenue. Both service revenue and installment billings are relatively stable revenue streams among wireless carriers such as T-Mobile, Sprint (S), Verizon (VZ), and AT&T (T).

You can get exposure to T-Mobile while diversifying risk by investing in the iShares U.S. Telecommunications ETF (IYZ) or the iShares Russell 1000 ETF (IWB). IYZ invested ~5.8% of its portfolio in the telecom company as of July 31, 2015. T-Mobile made up ~0.05% of IWB’s holdings on the same date.

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