T-Mobile brags about 5G to FCC, but does 5G improve revenues?

T-Mobile filed a heavily-redacted status update with the Federal Communications Commission (FCC) today. The Second Annual Progress Report was filed to update the FCC after its purchase of Sprint in 2020. Unfortunately, T-Mobile has redacted almost all the interesting benchmarks. For instance, it has a requirement to cover 55% of the U.S. rural population with its mid-band 5G by April 2023. The report says its current coverage is "just under its three-year milestone requirement,” but it doesn’t provide a specific percentage.

T-Mobile’s report says about 45% of its post-paid phone subscribers currently use a 5G device, and 5G traffic on its network has increased six-fold from April 2021 to April 2022, accounting for over half of all traffic carried on the network.

But is 5G increasing revenues?

While T-Mobile is bragging to the FCC about its advances in 5G, is the technology helping it or the other carriers to increase revenues?

LightShed Partners analysts Walter Piecyk and Joe Galone published a report today, noting that consumers don’t seem to care very much about 5G. This nonchalance is challenging the carriers to boost their post-paid phone revenue.

“Post-paid phone revenue, which represents 75% of total service revenue, is still the primary driver of growth,” wrote LightShed. The analysts estimate that in 2022, post-paid phone revenue will contribute 260 basis points of the 3.4% industry growth that it forecasts. And in 2023, it will contribute 220 basis points of the 3.2% expected growth. “Without post-paid phone revenue growth, these companies have major growth challenges,” said LightShed.

The analysts noted that differentiation between the wireless networks of the three major carriers is tight, and churn rates are at record lows. 5G has not been enough to attract wireless consumers to higher-priced rate plans.

The analysts think T-Mobile has better prospects for increased revenues from 5G than its competitors, but not great. “If we isolated wireless service revenue growth, T-Mobile is also the growth leader at 3.3% versus 3.0% and 1.8% for AT&T and Verizon, respectively.

T-Mobile might be the fastest grower among their peers, but it’s marginally better, and that growth is not fast.”

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