TBR
FOR IMMEDIATE RELEASE
U.S. telecom operators will remain in a fierce price war throughout
2015 that will impact ARPU and service revenue growth
HAMPTON, N.H. (April 6, 2015) — Technology Business Research, Inc.’s (TBR) 4Q14 U.S. & Canada
Mobile Operator Benchmark discusses capex trends, the ongoing competitive price war and growth in
connected verticals as well as how these trends impact revenue and subscriber growth. The research
shows how operators are investing past their initial LTE network builds to remain competitive amid
declining postpaid ARPU. Although capex will decline over the next five years, strategic pricing
pressures, led by T-Mobile and Sprint, will continue to hamper the postpaid market in 2015. The U.S. &
Canada Mobile Operator Benchmark identifies the key trends in the wireless market and the impact
these trends will have on operators and the industry over the next five years.
“T-Mobile will continue to apply pressure on the postpaid market in 2015 by increasing capex
investment to complete its LTE build-out and through new Un-carrier initiatives that lower price points
and negatively impact ARPU for the entire market,” said TBR Telecom Analyst Eric Costa. “Sprint will also
be aggressive in its pricing strategy in 2015, though the operator will be less successful in attracting new
subscribers than its Tier 1 competition for at least the next two quarters.”
Aside from the ongoing price war, operators are targeting spectrum purchases and supplemental LTE
network deployments. The investments will support rising data usage that will continue to escalate over
the next five years. Recently, AT&T, Verizon and T-Mobile participated in a government AWS spectrum
auction in which the carriers spent $18.2 billion, $10.4 billion and $1.8 billion, respectively. AT&T was
the highest spender at the auction and acquired 251 licenses, which will help AT&T catch up to Verizon
in spectrum ownership and provide extra network capacity to support rising data usage from connected
devices. Additionally, a 600MHz spectrum auction will be held in early 2016, which will be particularly
beneficial for enhancing Sprint’s and T-Mobile’s networks.
Tier 1 U.S. operators’ combined wireless capex decreased 3.7% year-to-year to $7.8 billion in 4Q14,
primarily due to lower spending on LTE deployments. AT&T and Sprint reduced capex in 4Q14 due to
lower spending on their respective Project VIP and Network Vision projects, while Verizon’s wireless
capex remained flat year-to-year, as the carrier is prioritizing investments to expand network capacity
and its XLTE service. T-Mobile’s capex rose 47.3% year-to-year, as the carrier increased spending to
catch up to competitors in LTE coverage.
Operators will face a challenging period in 2015, as they will need to balance low-priced plan offerings
and profitability. The focus will remain on driving short-term subscriber net additions to capitalize on
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their long-term lifetime value. Many Tier 1 operators will look for ways to reduce opex to help steady
margins as ARPU declines due to discounted plans and price cuts. North American vendors will need to
monitor the impacts of these trends and how they affect operator capex spending over the next five
years. The declining capex market forecast through 2020 will increasingly pressure infrastructure
vendors’ revenue streams.
For more information about the 4Q14 U.S. & Canada Mobile Operator Benchmark or to purchase the
report, please contact James McIlroy, vice president of sales, at [email protected] or call 603.929.1166.
ABOUT TBR
Technology Business Research, Inc. is a leading independent technology market research and consulting
firm specializing in the business and financial analyses of hardware, software, professional services,
telecom and enterprise network vendors, and operators. Serving a global clientele, TBR provides timely
and actionable market research and business intelligence in a format that is uniquely tailored to clients’
needs. Our analysts are available to further address client-specific issues or information needs on an
inquiry or proprietary consulting basis.
TBR has been empowering corporate decision makers since 1996. For more information please visit
www.tbri.com.
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