T-Mobile’s equipment revenues in 2Q17
T-Mobile (TMUS) differentiates itself from its rivals as the nation’s Un-Carrier, perceived as a market disruptor with low-cost plans, no required service contracts, and spearheading handset financing and device-upgrade plans. T-Mobile reported equipment revenues of $2.5 billion in 2Q17, an increase of ~14.5% from $2.2 billion in 2Q16. These revenues also reflected an ~22.7% increase from $2.0 billion in 1Q17.
According to the company, this increase in equipment revenues is mostly due to higher average revenues per device sold, the purchase of leased devices at the end of their lease term, and SIM and upgrade revenues.
T-Mobile’s renewed focus on its equipment installment plans (or EIP) resulted in higher equipment revenues. In installment plans, customers pay for their devices on a monthly basis.
T-Mobile’s postpaid device upgrade rate
T-Mobile’s equipment revenues in 2Q17 were composed of lease revenues of $0.2 billion and non-lease revenues of $2.3 billion. Unlike T-Mobile and Sprint (S), Verizon (VZ) and AT&T (T) do not offer device leasing plans. In 2Q17, the device upgrade rate for the retail postpaid base was ~7.0%, up from 6.0% in 2Q16, and it remained consistent with 1Q17.
Let’s look at the growth in wireless equipment revenues of the other major US wireless carriers in 2Q17. Verizon’s wireless equipment revenues rose ~16.0% year-over-year (or YoY) to reach ~$4.3 billion.
AT&T’s wireless equipment revenues from its domestic operations fell ~1.0% YoY to ~$3.0 billion in 2Q17. During the same quarter, Sprint’s wireless equipment revenues rose ~39.4% YoY to reach $2.1 billion.