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What’s Driving the Rise in T-Mobile’s Average Billings Per User?

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Unit contribution of T-Mobile’s postpaid customers in 3Q16

In this part of the series, we’ll look at T-Mobile’s (TMUS) ABPU (average billings per user). On the positive side, T-Mobile’s postpaid ABPU continued to improve YoY (year-over-year) during 3Q16. It rose ~0.7%, from $62.96 in 3Q15 to $63.38 in 3Q16. After adjustments for nonrecurring items such as the impact of its Data Stash plans, T-Mobile’s ABPU growth was ~1.5% YoY.

The main reason for this YoY rise was higher lease revenue. TMUS’s lease revenue rose from $0.03 billion in 3Q15 to $0.4 billion in 3Q16. Also, the introduction of the new T-Mobile ONE rate plans drove growth in T-Mobile’s branded postpaid ABPU. Since its launch, ~80% of new postpaid phone account activations have selected the T-Mobile ONE plan.

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ABPU includes both service revenue and installment payments made by postpaid customers. Note that installment billings fall under equipment revenue. Both service revenue and installment billings are relatively stable revenue streams for wireless carriers such as T-Mobile, Sprint (S), Verizon (VZ), and AT&T (T). T-Mobile’s Jump plan is an installment plan similar to Verizon’s Device Payment plan and AT&T’s Next plan.

T-Mobile’s average revenue per user in 3Q16

In 3Q16, T-Mobile’s branded postpaid phone ARPU (average revenue per user) rose ~0.3% YoY to reach $48.15. According to the company, after setting aside the impact of certain nonrecurring items, its postpaid phone ARPU rose ~1.5% YoY in 3Q16. T-Mobile expects the T-Mobile ONE plan to be neutral to accretive to its long-term ARPU trend.

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