Q2 2015: Verizon :: AOL Acquisition Timely As LTE Base Broadens

One of the top two US operators, Verizon announced its results today seeing some interesting growth in a what used to be a traditionally slow quarter. Furthermore, Verizon seemed to be immune from a strong and aggressive competition from T-Mobile during the quarter, which means other carriers especially Sprint might have had a tough Q2 2015

Looking at some interesting stats on Verizon network helps us understand a lot on the US market landscape:

  • Verizon added 1.1 million net retail postpaid connections in the quarter. Almost 852,000 out of those were tablets which highlights the growing adoption of “connected tablets” even though the overall demand for tablets remains soft
  • Verizon’s retail postpaid churn was 0.9% back to 2012 level.
  • Verizon’s retail postpaid activations were almost flat YoY, though more than 9 out of ten of those activations were smartphones and majority of them LTE enabled up sequentially.
  • As a result, Verizon’s total smartphone postpaid base penetration grew to 81% at the end of quarter though there are more than 16 million dumb phone users which Verizon network would like to upgrade on to LTE network
  • The “installment plan” revolution kickstarted by T-Mobile is growing swiftly now on Verizon, as the carrier saw almsot half of the phone activations to be on installment plans during the quarter.
  • The total phone base on installment plans has climbed to 14 million after a slow start compared to the adoption we have seen at AT&T and T-Mobile over the last year or so
  • Verizon’s total LTE devices installed base penetration has reached almost 73% i.e. almost three out of four devices on Verizon’s network is an LTE device
  • Out of those 76 million LTE devices, almost 62 million were smartphones which has increased by 40% YoY
  • Verizon’s LTE network has seen LTE traffic almost double in a year’s time and is now handling almost 87% of Verizon’s total wireless data traffic
  • Furthermore, Verizon’s total IoT & telematics revenue climbed to US$ 165 million in Q2’15 and on track to reach a billion dollar business annually by next year
  • During the quarter, Verizon also entered into digital content (OTT video services) and advertising business completing the US$4.4 Billion AOL acquisition and its dream to become no 1. technology media company i.e. more than being a dumb pipe
  • AOL acquisition thus comes at a very good times for Verizon, as the LTE base has broadened and is maturing fast enough to be leveraged for OTT content services play

Verizon’s performance signifies a few trends of ramp up in installment plans, LTE penetration now reaching above 80%, growth in IoT revenues for carriers with maturing LTE network as well as need for carriers to diversify and invest in OTT services business

LTE Penetration Verizon

Verizon Churn

 

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