According to a survey conducted by Cowen and Company in the third quarter of 2021, T-Mobile has the lowest average revenue per account (ARPA) for wireless subscribers. AT&T has the highest wireless ARPA, with Verizon falling in the middle of the pack.
Cowen, via its vendor Momentive, conducted its survey September 20-21 and had a total of 1,083 respondents. For its charts related to ARPA, it only highlighted its 775 postpaid respondents. The analyst group compared its third quarter survey results with a similar survey conducted in the second quarter on June 9-10, 2021.
In Q3 AT&T’s “all-in bill size,” including taxes and fees averaged $179, compared to Verizon’s $173 and T-Mobile’s $153.
“Over the past five quarters, we have seen postpaid respondents’ bill size decline toward the five-year historical average of $148,” wrote the Cowen analysts, led by Colby Synesael. “This quarter, however, postpaid respondents all-in bill size increased to near-record highs of $158, up from $151 in 2Q21 and $157 in 3Q 20.”
T-Mobile has made a commitment to low prices, but the analysts said T-Mobile seems to be offsetting this with initiatives to garner more customers for its high-end offerings such as Magenta Max.
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The analysts also noted that postpaid bill-payer respondents said they now have 3.30 devices on their plans, which is a survey record, and there’s been a notable jump in those saying they now have 4 devices. More devices help drive ARPA higher.
On its Q3 earnings call this week, Verizon reported that it increased its wireless postpaid ARPA by 3.9%, primarily from step-ups to premium tiers of unlimited. Promotional activities have been primarily focused on customers upgrading to higher priced plans.
“While Verizon can likely continue growing ARPA at +2-3% (with only 30% of its account base on premium unlimited), that pricing growth will eventually decelerate once they get to +50%, particularly with more low-cost options in the market (i.e. new cable plans, DISH wireless launches and TMUS remaining at a more attractive price point),” wrote Wells Fargo analyst Eric Luebchow in a research note this week.
Pricing competition
While analysts and investors like to see ARPA numbers move higher, customers obviously want to pay less for their mobile services.
Recent price cuts by the wireless brands from Comcast and Charter have caused anxiety for some investors.
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The new pricing from Charter’s Spectrum Mobile encourages customers to sign up for family plans. Its single lines for unlimited wireless are still $45. But if families add lines, the price goes down to $29.99 per line.
Charter basically followed Comcast’s lead with the new pricing. In April, Comcast’s Xfinity Mobile began offering its family unlimited plans for $30 per month, per line.
The cable companies might be able to undercut the wireless players on price because they consider wireless as a tactic to reduce their fixed broadband churn. Any revenue losses on the mobile side can be made up for, and more, from their lucrative wired broadband businesses.