T-Mobile’s revenue streams in 2Q15
In the last part of this series, we discoverd that T-Mobile’s (TMUS) revenue grew by a significant ~13.8% YoY (year-over-year) to ~$8.2 billion in 2Q15. In this part, we’ll look at the revenue performance of the firm’s two core segments: service and equipment.
Both service and equipment revenues grew robustly during the quarter. However, the YoY growth was more impressive in T-Mobile’s equipment segment. We’ll look at the performance of these revenue streams individually.
T-Mobile’s service revenue in 2Q15
Service revenues are stable revenue streams common among wireless carriers such as T-Mobile, Verizon (VZ), AT&T (T) and Sprint (S). T-Mobile’s service revenue increased by ~12% YoY to reach ~$6.1 billion in 2Q15.
The postpaid and prepaid segments continued to fuel service revenue growth during the quarter. Yet growth was more significant in the postpaid segment. Service revenue in the postpaid segment grew by ~16.1% YoY to reach ~$4.1 billion in 2Q15. The prepaid segment also contributed ~$1.9 billion of service revenue. This revenue stream grew by ~7.2% YoY during the quarter.
T-Mobile’s smartphone sales grow robustly in 2Q15
T-Mobile’s equipment revenue increased by a significant ~19.7% YoY to reach ~$1.9 billion this quarter. The growth in equipment revenue stems from a higher number of smartphones sold YoY in 2Q15. The telecom company sold ~7.4 million smartphones during the quarter. T-Mobile sold ~6.2 million smartphones during 2Q14.
Also on the positive side, T-Mobile’s handset upgrade rate in the postpaid segment increased from ~8% in 2Q14 to ~9% in 2Q15.
You may 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 holdings in the telecom company as of July 31, 2015. T-Mobile accounted for ~0.05% of IWB’s holdings on the same date.