The second quarter of 2017 was a good one for US mobile operators. AT&T, T-Mobile, Verizon and Sprint all gained total customers last quarter and all made a profit too, even perennial loser Sprint.
AT&T gained 127,000 postpaid, 267,00 prepaid and 2.26 million connected device customers but lost 369,000 reseller customers for a total gain of 2.28 million domestic subscribers vs gains of 2.08 million in Q1 2017 and 1.36 million a year ago in Q2 2016.
T-Mobile added 817,000 postpaid, 94,000 prepaid customers and 422,000 wholesale customers for a total gain of 1.3 million customers. That compares with gains of 1.14 million in Q1 2017 and 1.88 million in Q2 2016.
Verizon added 614,000 postpaid connections and 19,000 prepaid customers for a total gain of 633,000 vs gains of 324,000 in Q1 2017 and 585,000 in Q2 2016.
Sprint reported adding 35,000 prepaid and 65,000 wholesale customers but lost 39,000 postpaid customers (mostly tablets) for a total gain of 61,000 customers vs gains of 368,000 in Q1 2017 and 602,000 million in Q2 2016.
Verizon, AT&T Sprint and T-Mobile were all profitable last quarter. For Sprint it was the first profitable quarter in three years.
Verizon made a profit of $4.36 billion last quarter compared with $3.5 billion in Q1 2017 and 702 million a year ago in Q2 2016.
AT&T made $3.9 billion last quarter compared with $3.5 billion in Q1 2017 and $3.4 billion in Q2 2016.
T-Mobile made $581 million last quarter compared with $698 million in Q1 2017 and $479 million in Q2 2016.
Sprint earned $206 million compared with losses of $283 million in Q1 2017 and $554 million in Q2 2016.
Here's how the operators ranked by total subscribers at the end of the quarter:
Verizon 143.6 million*
AT&T 136.5 million
T-Mobile 69.6 million
Sprint 53.7 million
*Estimated. Verizon doesn't report wholesale customer numbers. Verizon reported 114.5 million retail connections at the end of Q2, 2017. I estimate that Verizon has approximately 143.6 million total subscribers, including wholesale connections.
América Móvil's Tracfone subsidiary lost 636,000 subscribers last quarter. That compares with a loss of 1.3 million in Q1, 2017 and a gain of 110,000 in Q2, 2016. TracFone blamed the subscriber loss on increased competition and seasonal effects. TracFone's revenue of $1.93 billion this quarter was down 2.5% compared with Q1, 2017 but up 8.8% compared with the second quarter of last year. TracFone operates the Straight Talk, NET10, Tracfone, Simple Mobile, Page Plus, Total Wireless, Telcel America, Walmart Family Mobile, GoSmart and SafeLink Wireless MVNO brands in the US.
Postpaid phone customers are generally much more profitable than tablet, connected device, prepaid and wholesale customers. Industry watchers put a lot of emphasis on postpaid phone customer gains and loses. T-Mobile once again lead the pack and added the most postpaid phone additions for the 13th consecutive quarter in a row. Only AT&T lost postpaid phone subscribers this last quarter.
The number of branded prepaid customers decreased by 221 thousand, the second consecutive quarterly decrease. All the loss came from TracFone. These are troubled times for MVNOs like TracFone as the MNOs continue to aggressively court the prepaid market.
Total prepaid customers by carrier as of the end of last quarter were:
Tracfone 24.1 million
T-Mobile 20.3 million
AT&T 14.19 million
Sprint 8.7 million
Verizon 5.45 million
In a bit of accounting legerdemain, Sprint and T-Mobile announced this quarter that they are no longer including wholesale or retail Lifeline customers in their customer counts. Both indicated that tighter enforcement of eligibility criteria for Lifetime program, which provides government subsidized free phones and service to low income individuals, have resulted in Lifeline subscriber losses.
T-Mobile said that it had 4.4 million Lifeline customers, all wholesale, at the end of Q1, 2017. Sprint reported 2.8 million wholesale Lifeline customers and 3.3 million Assurance Wireless customers at the end of Q1. It's not clear how many Lifeline customers Sprint and T-Mobile have left but the fact that they are no longer including Lifeline in their totals suggests that they have experienced significant losses.
In summary, All four national carriers were profitable last quarter and reported subscriber growth. However their were signs that growth is slowing. AT&T's growth was almost all in low revenue connected devices. T-Mobile's prepaid additions were way down from previous quarters. Sprint and T-Mobile excluded Lifeline customer loses from their subscriber growth numbers, artificially inflating them. TracFone lost customers and its revenue declined last quarter.