How Important Is Equipment Revenue for T-Mobile?

Telecom companies break down their wireless sales into service and equipment revenue. Wireless equipment revenue includes tablet and handset sales, while service revenue includes subscription charges for postpaid and prepaid subscribers.

In this part, let’s look at T-Mobile’s (TMUS) equipment revenue trends over the last few quarters. In the first quarter, T-Mobile’s equipment revenue rose ~15.2% YoY (year-over-year) to $2.4 billion from $2.0 billion.

According to the company’s Q1 2018 investor factbook, “Year-over-year, the increase was primarily due to higher average revenue per device sold due to a mix shift and a decrease in promotions, a positive impact from the new revenue standard of $77 million and increased proceeds from liquidation of returned customer handsets.”

In the first quarter, T-Mobile’s equipment revenue comprised $0.17 billion in lease revenue and $2.2 billion in non-lease revenue. Unlike Sprint (S) and T-Mobile, Verizon (VZ) and AT&T (T) do not offer device leasing plans.

In the first quarter, Verizon’s wireless equipment revenue rose ~33.9% YoY to $5.0 billion, AT&T’s wireless equipment revenue from its combined domestic operations rose ~50.3% YoY to $4.0 billion, and Sprint’s wireless equipment revenue fell ~8.5% YoY to $2.2 billion.

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