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9 August 2021

T-Mobile leads US big three in financials and speeds in Q2 2021

All three major US mobile operators have now reported solid second quarter financial results, but T-Mobile’s were the most impressive overall, continuing a sustained period of growth in subscribers as well as 5G performance benchmarks.

TMO posted revenues up 12.9% year-on-year for the quarter, at $19.95bn, while net income shot up almost ninefold from $110m to $978m. The latter was attributed to a combination of service revenue growth on a slower moving cost base and what the company called synergy realization. This can only have been referring to the operator’s $26.5bn takeover of Sprint approved in February 2020, but no further details were given. It may refer to consolidation of infrastructure to reduce the cost of mobile service delivery, as well as reduction in duplicated staff, offices and operations.

Verizon also beat estimates by over $1bn, with revenues rising almost as sharply as TMO’s – by 10.9% year-on-year to $33.8bn for the quarter. The operator cited higher demand than anticipated for 5G-related services and devices, accelerating acquisition of subscribers. Net income for the quarter was up by a smaller percentage but from a higher base, from $4.8bn a year ago to $5.9bn this year.

For Verizon, the figures were welcome relief after a year in which it has struggled to benefit from its decision to focus strongly on millimeter wave spectrum, which at this stage is supporting networks with a relatively small catchment area despite their high performance. Its shares have slid by 5% in 2021 so far at a time when the S&P 500, the index widely held to give the most accurate measure of US stock movements, has soared 15% in the same period.

AT&T was the first of the three to report, with consolidated revenues of $44bn for its Q2, up 7.6% year-on-year. Net income was up 25% at $1.5bn, so a similar percentage to Verizon but from a lower base.

It is worth noting that none of the big three has managed to keep up with the S&P 500 index during 2021 so far. That applies even to TMO, although it is not far off, and its price is up 25% over the past 12 months as a whole. This reflects concerns over the cost of 5G roll-out, although the operator has on the whole engendered positive sentiment.

Verizon and AT&T also have substantial fixed line businesses, as well as video, so we are not quite comparing like with like. AT&T will perhaps by most satisfied of those two after also experiencing a turbulent period, with the dramatic decline of its satellite TV business DirecTV. It was some relief then that AT&T was able to trumpet Q2 gains across all three key sectors – wireless, fiber and HBO, the pay-TV network that is now the fulcrum of its video business.

In future that distinction may diminish, given that TMO now offers discounted access to YouTube TV and has also entered the home broadband field with a fixed wireless access service. Furthermore, TMO recently joined AT&T and Verizon in offering a FWA Internet service to enterprises.

There is one wireless measure by which the three operators can readily be compared, which is net postpaid subscriber additions, with the caveat that care has to be taken to ensure each operator is measuring these the same way. On this score, TMO again appears to be top at present, reporting 1.3m net additions over the quarter.

Verizon reported 275,000 post-paid net additions over the quarter, and AT&T 595,000.

The third operator has also come out in front in some recent benchmarks for 5G performance, coming well ahead of its rivals in 5G download speeds, according to London-based mobile analytics firm OpenSignal, with an average reported speed of 87.5Mbps, compared with 52.3Mbps for Verizon and similar for AT&T. TMO was also top for 5G availability and reach.

And it was the fastest and most consistent US mobile operator with a 54.13Mbps median download speed, in tests just reported by broadband test specialist Ookla. However, the three tied on Ookla’s latency tests at 33ms each.

Honors were also split in the latest tests from Rootmetrix. AT&T was top in the ‘Best Everyday 5G’ category, while TMO was rated highest for 5G availability. Verizon won for reliability and improvement in both speed and availability.

For users, the relative merits depend on specific requirements and also locations where services are most often required.