The “Wireless Wars” was one of our top themes over the past two years; the top wireless and cable providers reported Q1 results this week which showed once again the success that T-Mobile is enjoying in rural and suburban areas, which is achieved by having network superiority, a better alternative for home internet, and new retail presence in these areas. Prior to its merger with Sprint, T-Mobile was predominantly in urban markets and that’s where its retail footprint was concentrated. Acquiring Sprint gave T-Mobile the spectrum it needed to launch a 5G network that would be superior to both Verizon and AT&T in not only urban markets, but suburban and rural markets as well. Since June of 2022, T-Mobile has added over 500 new locations, including 40 in April alone. T-Mobile has a long way to go in suburban and rural markets as it has less than 30% of the footprint that Verizon and AT&T have in these markets.
Looking at the list of new T-Mobile locations, most are in rural and suburban markets like Sheldon, Iowa and Conroe, Texas. T-Mobile also outperforms in visits per location (below) and it has consistently outperformed the competition in growing traffic and market share.
The expansion into new markets and gains in visits has resulted in T-Mobile adding 2.3M net new postpaid phone subscribers over the past year and 8.1M new home broadband subscribers. How these figures compare is shown in the table below.
The consumer/macro takeaways from the results are: (1) the competitive intensity between wireless and cable is intensifying, as cable added more wireless subs than the Big 3 wireless companies on a trailing-twelve-month basis and the Big 3 added 12.4M home broadband subs versus 0.2M for the Big 2 companies; (2) rising economic pressures on consumers is incentivizing them to keep their handsets for longer, and so upgrade rates fell 110 basis points quarter-over-quarter (not great for Apple and as shown in the figure below, traffic to Apple stores took a step down in Q1); and (3) consumers are shopping around more to save money (churn rates and disconnects were higher YoY) making retail locations more important and active. Lastly, additional spectrum and coverage in suburban and rural markets for Verizon and T-Mobile during 2023 is going to extend this story well beyond, which will be reflected in more retail locations and markets as well.
