T-Mobile’s average revenue per user
The inclusion of wireless service fees and taxes at existing price points can dilute a telecom company’s ARPU (average revenue per user). But T-Mobile’s (TMUS) management expects stable ARPU growth going forward because dilution from the inclusion of its wireless service fees and taxes will likely be offset by the accretion in ARPU that the company saw with its T-Mobile ONE offering.
Wall Street analysts expect T-Mobile’s postpaid phone ARPU to rise ~3.1% YoY (year-over-year) to reach ~$47.64 in 1Q17.
According to a FierceWireless report on April 3, 2017, “It should come as no surprise that wireless remains fiercely competitive, with 1Q bringing the return of Verizon Unlimited, a revamped Unlimited offering at AT&T, new pricing promotions at Sprint, and the elimination of taxes [and] fees at T-Mobile.”
According to the same report, “The net result is likely higher churn as well as [apply] near-term ARPU pressure, given customer rightsizing and less overage revenue. All this aid what appears to be more than just a seasonally soft gross add quarter.”
In 4Q16, T-Mobile’s branded postpaid phone ARPU rose ~0.7% YoY to reach $48.37. This increase resulted from upgrades to T-Mobile ONE and the MVNO (mobile virtual network operator) transaction.
T-Mobile’s average billings per user
T-Mobile’s postpaid ABPU (average billing per user) fell YoY during 4Q16. Its postpaid ABPU fell ~1.0% from $63.74 in 4Q15 to $63.08 in 4Q16. T-Mobile’s postpaid ABPU fell YoY, mostly due to lower its EIP (equipment installment plan) billings and to dilution from the increased penetration of mobile broadband devices. However, the company’s postpaid ABPU decline was partially offset by a rise in lease revenues in 4Q16.
ABPU encompasses service revenues 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 Communications (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.