uploads///T Mobile Q Pre Postpaid ABPU

T-Mobile’s Average Revenue per User in 4Q16: What to Expect

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Feb. 7 2017, Updated 10:37 a.m. ET

T-Mobile’s average revenue per user

In this part of the series, we’ll look at the postpaid phone ARPU (average revenue per user) for T-Mobile (TMUS). The inclusion of wireless service fees and taxes at existing price points could dilute ARPU. However, T-Mobile’s management expects stable ARPU growth going forward.

In 3Q16, T-Mobile’s branded postpaid phone ARPU increased ~0.3% YoY (year-over-year) to reach $48.15. After setting aside the impact of certain nonrecurring items, the company noted that its postpaid phone ARPU rose ~1.5% YoY in 3Q16. T-Mobile expects the T-Mobile One plan to be neutral to accretive to longer-term ARPU trends.

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T-Mobile’s average billings per user

T-Mobile’s postpaid ABPU (average billings per user) continue to improve YoY 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 from Data Stash, its ABPU growth was ~1.5% YoY.

This YoY increase was mostly due to higher lease revenues. Lease revenues increased from $30 million in 3Q15 to $400 million in 3Q16. Also, the introduction of the new T-Mobile One rate plans drove the growth in T-Mobile’s branded postpaid ABPU.

ABPU includes both service revenues and the installment payments by postpaid customers. Installment billings fall under equipment revenues. Both service revenues 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 that is similar to Verizon’s Device Payment Plan and AT&T’s Next plan.

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