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As wireless earnings season begins, analysts will question whether bundling deals and heavy discounts on handsets were enough to shield the industry from inflationary pressures and sustain strong growth in subscribers in the third quarter. will judge.
Inflation continues to rise, leading to discriminatory consumption of some products and services. The core consumer price index has risen 6.6% since September 2021, the biggest annual gain since August 1982, the Bureau of Labor Statistics reported Oct. 13. But the price customers paid for wireless dropped by 1.1% in that year.
So far, carriers have been able to maintain momentum through device subsidies. According to Lynnette Luna, an analyst for her Kagan, a media research group at S&P Global Market Intelligence, the company has also created premium service her bundles with additional lines and content her package, allowing customers to I am happy to pay for it.
“The carriers have been doing a good job of offering deep discounts on smartphones to attract users. increase.
competition and churn
A prime example of premium service bundles can be found from Verizon Communications Inc. telephone company launch new prepaid wireless brand, Total by Verizon, September. 21. Monthly plans start at $30, Total’s most premium plan is $60 per month and includes a Walt Disney Co. Disney+ subscription, 5G Ultra Wideband access, unlimited calls, text and data, 20 GB hotspot data, international calls and texts to 69 countries. will be
Total follows the July launch of Verizon’s Welcome Unlimited plan. The service starts at $30 a month for four lines and includes Disney+, his six-month free trial of Apple Music from Apple Inc., and a selection of game subscriptions.
It’s something Verizon offers as it tries to maintain its market leadership position. Although the overall wireless market remains strong, Verizon reported net postpaid phone additions of only 12,000 in the second quarter and a loss of 36,000 in the first quarter. As for the third quarter, the company expects to post a loss on mobile phones.
Additionally, Verizon is losing its distribution. Verizon’s store count fell from 7,079 in November 2019 to 6,438 in November 2021 and 6,390 in May 2022, according to data from wireless research firm Wave7 research.
In a presentation at a Goldman Sachs investor event, Verizon Chairman and CEO Hans Vestberg said: in September.
Vestberg attributes the increase in customer churn in the third quarter to a price increase announced in late June that increased customers’ monthly bills by as much as $12.
“The price hike is going to create a churn bubble on the consumer side in the third quarter, because that’s how it works,” Vestberg said, noting that the price increase was “an economically sound and sound decision. , continue to grow cash flow.”
fixed wireless extension
Despite declining store and wireless subscriber numbers, Verizon has been aggressive in its fixed wireless expansion strategy. Kagan’s Luna said revenue from the company’s fixed-wireless business supported overall revenue growth in the fourth quarter. of The company aims to reach at least 175 million people with its 5G ultra-wideband network by the end of 2022.
“We are likely to see significant revenue increases as fixed wireless access grows and existing wireless customers take advantage of significant discounts on fixed wireless access services,” Luna said. “Fixed wireless and mobile Her wireless is becoming an attractive bundle.”
Beyond Verizon, T-Mobile US Inc. is also poised for fixed wireless growth.
After reporting 1.5 million fixed wireless home Internet customers at the end of the second quarter, T-Mobile hopes to reach 7 million to 8 million fixed wireless subscribers by 2025.
T-Mobile President and CEO Mike Sievert said at the Goldman Sachs investor conference:
faster and cheaper
As for T-Mobile’s 5G wireless service, the company was recently recognized as a 5G global winner for both availability and reach by wireless analytics group Opensignal Ltd. Opensignal reported that 5G users on T-Mobile’s network spent the most time with an active 5G connection and detected a 5G signal in the highest percentage of locations. T-Mobile has confirmed that 5G download speeds have increased by 98.9% from the first half of 2021 to 2022.
“We have won the game of scale and capacity. We are the clearly proven leader in 5G,” said Sievert.
T-Mobile reported 723,000 postpaid phone net additions in the second quarter and 589,000 in the first quarter.
According to Opensignal, AT&T Inc. is also offering customers faster download speeds with its deployment of key mid-band spectrum. The analytics firm reports that the AT&T user’s 5G download speed has increased 34.5% since his March, and in September he climbed from 50 Mbps to 67.3 Mbps.
“AT&T has made significant progress in rolling out 5G services in the mid-band, but still lags behind T-Mobile and Verizon,” the report said. “Compared to them, AT&T relies heavily on low-band spectrum to provide subscribers with her 5G connections.”
AT&T reported 813,000 postpaid phone net additions in the second quarter and 691,000 in the first quarter.
Some analysts attribute AT&T’s growth to phone discounts, but AT&T president and CEO John Stankey says promotions are only part of the story.
“I know people like to say, ‘There’s a high level of promotion going on, but that’s not the case,'” Stankey said at a Goldman Sachs event. I think we have a winning combination.I think we’ve seen the network improve dramatically.I think we have a better performing workforce than we’ve ever had…and We feel that way. Our ability to manage that momentum is truly amazing.”
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