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Why T-Mobile Expects Stable ARPU Growth in 2017

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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 its ARPU. 

During the recent T-Mobile’s 1Q17 earnings conference call, T-Mobile’s management reaffirmed that it expects stable ARPU growth going forward. This is because dilution from the inclusion of wireless service fees and taxes would be offset by the accretion in ARPU that the company saw with T-Mobile ONE.

According to a FierceWireless report on April 25, 2017, “We still have stable ARPU, we see good monetization opportunities, and we do see that our competitors don’t have the ability to do this.”

In 1Q17, T-Mobile’s branded postpaid phone ARPU rose ~2.9% YoY (year-over-year) to reach $47.53. This increase resulted from upgrades to T-Mobile ONE and the MVNO (mobile virtual network operator) transaction.

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T-Mobile’s average billings per user

T-Mobile’s postpaid ABPU (average billing per user) was $61.89 in 1Q17, down ~1.9% from $63.08 in 4Q16 and flat compared to 1Q16. T-Mobile’s postpaid ABPU was flat YoY, mostly due to the decrease in lease revenues being partially offset by higher branded postpaid service revenues.

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 (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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