Key Points:
- The growth in wireless gross adds should accelerate slightly. TMUS should be the share taker. Verizon is the likely share donor given its softer foot traffic and that it lacked a differentiated promotion until mid-June.
- Given more subdued foot traffic to Apple stores, we expect its Americas revenue growth to be less dynamic this quarter, following powerful upside each of the prior two. That also suggests that equipment expense (in aggregate) for the wireless operators may be less “biting.”
As a reminder, Advan’s traffic data to the Big-3 wireless stores has proven to be an accurate read on new sign-ups and gross adds during the quarter; i.e. has the quarter been more / less active. However, this view is limited to consumer; we don’t see medium-size and enterprise activity, which at 15% of all lines, can be significant. Q2 was +44bps more active than Q1. In Q1, postpaid phone gross adds* for the Big-3 + CMCSA & CHTR was 9060K and up +13% YoY, disconnects only increased +11%, and total lines* hit 254.5M, up +4.6% YoY. For Q2, it looks like TMUS and T were the share takers. Verizon will be “interesting.” For Q1, wireless phone net adds were stronger for CMCSA, whereas CHTR disappointed. Based upon that precedent, we’d expect CMCSA to again outperform CHTR. Relative to the past two quarters, we expect Apple’s America’s revenue to be less dynamic given its softer foot traffic, which should help cap the “toll” from handsets on the carriers’ bottom lines.
In terms of the quarter’s promotional activity, TMUS’ iPhone 17 trade-in offers appear to have resonated with consumers as suggested by its stronger foot traffic. Claude.ai observed, “All three carriers converged on roughly the same ceiling — $1,000–$1,100 in total credits on the Pro/Pro Max models with a strong trade-in and top-tier plan. AT&T's structure is the most tiered/graduated of the three, with explicit dollar bands ($1,100 / $700 / $500 / $350) keyed to trade-in value and plan level, whereas T-Mobile leaned more on "free with trade-in" simplicity in its marketing and Verizon presented a single "up to $1,000/$1,100" headline number. AT&T's credits run over 36 months, versus T-Mobile and Verizon's more common 24-month bill-credit terms — meaning AT&T's per-month credit is smaller even when the total dollar value is comparable, and the commitment window is longer. On the budget end, AT&T's iPhone 17e deal (~$5.99/mo, no trade-in emphasis) was less aggressive than T-Mobile's free-with-trade-in 17e offer.”
Speaking of “Simplicity,” on June 16th, Verizon unveiled its Simplicity plan, which is priced at $45 per month per line (with autopay discount) and includes unlimited 5G ultra-wideband data, satellite-based texting, and 10GB of hotspot data. The Simplicity plan intends to be a simple, easy-to-understand value proposition, with no network tiering or phone subsidies and should improve Verizon's ability to penetrate the value-oriented segment of the postpaid wireless market. For single lines, the new $45 rack rate represents a ~$10-20 discount vs the standard undiscounted price of the company's pre-existing Unlimited Welcome plan. While foot traffic improved at Verizon, with the launch, the same was true for AT&T and TMUS. As such, we suspect that while the offer was incremental to improving the brand’s value positioning, it doesn’t appear to have moved the business (yet).‘* As TMUS no longer reports subscriber numbers, we estimate them based on the number of disclosed accounts.
