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Analyzing Trends in T-Mobile’s Average Revenue per User

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T-Mobile’s average revenue per user

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

During the Morgan Stanley Technology, Media and Telecom Conference on February 27, 2017, Braxton Carter, T-Mobile’s chief financial officer, spoke about stable ARPU growth going forward.

Carter said, “Dilution from including taxes and fees would be offset by the accretion in ARPU that we saw with T-Mobile ONE and that our full expectation is executing to a stable ARPU environment and we are the only carrier out there with stable ARPU.” He also said, “We have no desire to execute to a declining ARPU.”

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In 4Q16, T-Mobile’s branded postpaid phone ARPU rose ~0.7% YoY (year-over-year) to reach $48.37. This rise resulted from upgrades to T-Mobile ONE and an MVNO (mobile virtual network operator) transaction. The company noted that in 4Q16, its postpaid phone ARPU rose ~2.0% YoY after excluding the impact of some nonrecurring items.

T-Mobile’s average billing per user

T-Mobile’s postpaid ABPU (average billing per user) fell ~1% YoY in 4Q16, from $63.74 in 4Q15 to $63.08 in 4Q16. T-Mobile’s postpaid ABPU fell YoY, mostly due to lower Equipment Installment Plan billings and dilution from the increased penetration of its mobile broadband devices. However, the company’s postpaid ABPU fall was partially offset by a rise in its lease revenue in 4Q16.

ABPU encompasses service revenue and installment payments made by postpaid customers. These installment billings are categorized as equipment revenues.

Installment billings and service revenues provide stable revenue sources for major wireless carriers T-Mobile, Sprint (S), Verizon (VZ), and AT&T (T). T-Mobile’s JUMP! installment plan is similar to Verizon’s Device Payment plan and AT&T’s Next plan.

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