tag:blogger.com,1999:blog-17009353164842698362024-03-13T09:01:33.013-04:00Mobile Musings and Analysis556 Ventureshttp://www.blogger.com/profile/08323882447629466573noreply@blogger.comBlogger124125tag:blogger.com,1999:blog-1700935316484269836.post-43961782160642097612021-07-19T16:14:00.005-04:002021-07-28T08:28:32.123-04:00Impacts: DISH & AT&T's Network Services Agreement <p><b>What:</b> DISH and AT&T <a href="https://ir.dish.com/news-releases/news-release-details/dish-and-att-sign-strategic-network-services-agreement" target="_blank">signed a long term network service agreement </a>making AT&T the primary network for its DISH MVNO brand (Boost Mobile, Ting and Republic Wireless) customers.</p><p>Though the terms were not disclosed in the DISH SEC<a href="https://ir.dish.com/node/32971/html" target="_blank"> 8-K filing</a>, the media reports point to 10 years and worth at least $5 billion. Moreover, the agreement allows AT&T to use a portion of DISH's spectrum in various markets to help support DISH's customers on the AT&T network. Lastly, AT&T is providing transport services to support DISH's 5G network. </p><p><b>Why</b>: DISH needed to exit/held hostage to an acrimonious T-Mobile relationship prompted by the announced CDMA network sunset by January 2022. The sunset would require DISH to convert (read handset subsidy) those legacy CDMA subs to newer compatible devices. </p><p><b>When</b>: That is an unknown on the rollover of these customers. However, it's likely before the end of 2021.</p><p><b>Impact:</b></p><p></p><ul style="text-align: left;"><li>DISH</li><ul><li>Gets out from under the T-Mobile thumb/control despite favorable ostensibly wholesale rates when it took over the Boost branded base </li><li>Likely to receive an incentive monetary sum to assist DISH move subscribers onto AT&T network </li><li>Gets out of direct device subsidies of those CDMA subscribers; could use that incentive sum to help offset those devices</li><li>Possibly gets access to AT&T device relationships to drive down DISH's subsidy costs (near term and future) as well helping to pad the device offerings</li><li>Ostensibly, this AT&T wholesale deal would provide better monetary terms/outcome for DISH in order to exit the T-Mobile relationship </li><li>Allows DISH to bundle wireless service with its own satellite television service (double play) allowing for increased ARPU and growth in rural communities it currently serves</li></ul></ul><p></p><ul style="text-align: left;"><li>T-Mobile</li><ul><li>Loses wholesale revenue from '22 onward though the T-Mobile should have factored in DISH's 5G network buildout projections and worse case planning given the increasing symmetrical war of words </li><li>Loses a customer/partner that is increasing hostile (the T-Mobile Grinch commentary). That could be construed as a good thing.</li><li><strike>With 'renting' some of DISH's 600 MHz spectrum that allows for T-Mobile's vast national 5G claims, DISH could opt to terminate the spectrum leasing and leave T-Mobile with future 600 LTE & 5G coverage holes. </strike> T-Mobile and DISH came away with a 42 month lease arrangement back in late '20.</li></ul></ul><ul style="text-align: left;"><li>AT&T</li><ul><li>Gains future wholesale revenue, presumably for 10 years, and takes it away from arch rival T-Mobile</li><li>Gains access to DISH's spectrum in certain markets</li><ul><li>Though the primary purpose was to support DISH's customers, what's to stop AT&T to also support AT&T customers?</li><li>Markets were not identified but likely in dense urban markets where Boost subscribers consumer service</li></ul><li>Unclear whether this is relegated to just LTE connectivity or future 5G as DISH would logically have its own national 5G owner's economics </li><li>Gets near term and future transport revenue for DISH's 5G buildout. This would help with some return on investment (CapEx) on the company's big multi-year fiber push and buildout </li><li>Allows DISH to blunt T-Mobile rural growth as a viable competitor (if DISH can execute) </li></ul></ul>556 Ventureshttp://www.blogger.com/profile/08323882447629466573noreply@blogger.comtag:blogger.com,1999:blog-1700935316484269836.post-71255609129544505982021-03-09T14:01:00.002-05:002021-03-10T07:44:56.838-05:00T-Mobile’s WFX Enterprise Growth Opportunity <p><span style="font-family: arial;"></span></p><div class="separator" style="clear: both; text-align: center;"><span style="font-family: arial;"><a href="https://1.bp.blogspot.com/-hLa9dp7C9AM/YEIe3JFMYtI/AAAAAAAAGZY/lDBcNPZij6UTJpAKY5RvFUiANCsNOO91wCNcBGAsYHQ/s720/TFB_WFX_Logo_Static_RGB_On-W_2021-03-03.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="352" data-original-width="720" height="98" src="https://1.bp.blogspot.com/-hLa9dp7C9AM/YEIe3JFMYtI/AAAAAAAAGZY/lDBcNPZij6UTJpAKY5RvFUiANCsNOO91wCNcBGAsYHQ/w200-h98/TFB_WFX_Logo_Static_RGB_On-W_2021-03-03.png" width="200" /></a></span></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: justify;"><span style="font-family: arial; text-align: left;"><b>Macroview</b>: WFX is the first major <a href="https://www.t-mobile.com/news/business/unprecedented-times-meet-the-un-carrier-t-mobile-unveils-big-moves-for-businesses" target="_blank">move</a> since the integration of the Sprint’s and T-Mobile’s Business groups. Perhaps by design, the business activities from the pre-new T-Mobile centered solely on small business growth. This segment wasn’t a stretch as there are overlapping profiles between consumer and small business. Therefore the retail playbooks looked similar. </span></div><p></p>
<p style="font-stretch: normal; line-height: normal; margin: 0px; min-height: 12px;"><span style="font-family: arial;">As the merger moved positive, T-Mobile was banking on Sprint’s business expertise in complex services and its enterprise accounts as a jumping off point to tackle competitors AT&T and Verizon. In an analyst call, T-Mobile’s EVP for Business, Mike Katz stated that those competitors controlled 91% of the enterprise market. </span></p><br /><div><b style="font-family: arial;">Opportunity</b><span style="font-family: arial;">: T-Mobile’s aggressive network buildout with Sprint spectrum assets set the table for enterprise conversations that never could have happen as standalone Sprint or legacy T-Mobile. T-Mobile’s marketing messaging of its aggressive 5G geographic footprint and increase capacity is now the calling cards to those premium enterprise accounts and leads, those who favor geographic breadth and reliability over price. Yet the company's consumer and small business price leadership reputation doesn’t hurt either, as cost is a key factor for procurement managers.</span></div><div><p style="font-stretch: normal; line-height: normal; margin: 0px;"><span style="font-family: arial;"><br /></span></p><p style="font-stretch: normal; line-height: normal; margin: 0px;"><span style="font-family: arial;">The Next Big 5G-Powered Move: There are <i>three</i> components for this WFX business focused announcement. WFX (work from anywhere) as opposed to WFH (work from home) is a nod to the change in forced work due to the pandemic. The three components offer an opportunity to bundle a sale to those business or government entities who look to shift from an office workforce to a partial or fully remote one. While competitors may have the same piece parts, a bully baked and coherent portfolio offering helps the perception of corporate focus and credibility. There is also the unaddressed minor adoption approach - corporate or individual liable. Ideally, a corporate liable approach alleviates out of the pocket expenses and control for procurement managers and mostly employees.</span></p><ol style="text-align: left;"><li style="font-stretch: normal; line-height: normal; margin: 0px;"><span style="font-family: arial;"><i>Enterprise Unlimited Plans</i> - unlimited 4G and 5G data is no big deal in the consumer and small business world but in corporate and governments accounts, competitors' plans centered on pooled data plans. The clear benefit is not worrying and managing data thresholds for managers, employees and intangibly reduce overall internal OpEx. <br />
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<li><i style="font-family: arial;">T-Mobile Home Office Internet</i><span style="font-family: arial;"> - While many companies are ok with co-mingling an employee's internet, perhaps with a bolt-on VPN, the pandemic and pandemic era collaboration tools have, in some cases, taxed the up and downlink throughput of a consumer grade internet connection. T-Mobile claims this offering comes with enterprise grade SLAs where specific work-related data is prioritized. To be clear, this is a fixed wireless access offering with an included router. The big unknown for the subscriber will be T-Mobile's build out, LTE or 5G and what the associated up and downlink expectations may be. </span><a href="https://1.bp.blogspot.com/-_ebtdCv_dVk/YEIe7g9Aj7I/AAAAAAAAGZc/nchESAsitYgWV2SsqPn4Gl1mREhoOuTnQCNcBGAsYHQ/s2048/TMO_High-Speed-Internet-Wi-Fi-6-System_Gateway_Matte-Gray_Dynamic-Front.png" style="clear: right; display: inline; margin-bottom: 1em; margin-left: 1em; text-align: center;"><img border="0" data-original-height="2048" data-original-width="1437" height="126" src="https://1.bp.blogspot.com/-_ebtdCv_dVk/YEIe7g9Aj7I/AAAAAAAAGZc/nchESAsitYgWV2SsqPn4Gl1mREhoOuTnQCNcBGAsYHQ/w89-h126/TMO_High-Speed-Internet-Wi-Fi-6-System_Gateway_Matte-Gray_Dynamic-Front.png" width="89" /></a> </li><li><i style="font-family: arial;">T-Mobile Collaborate </i><span style="font-family: arial;">- To round out the offering, a unfiied communications cloud -based platform play is in order. While UC is tablestakes in any enterprise portfolio, bundling it into WFX is a necessary holistic solution to address competitors’ similar offerings. With Dialpad (a TMobile Ventures investment), there should be some owner's economics and control in Dialpad's future refinements. </span></li></ol><div><span style="font-family: arial;"><b>The Path Forward: </b>With the consumer side launching Magenta Max and WFX launched in 1Q21, the company is positioning itself to be a more premium carrier as articulated in previous earnings calls. Unlike the more transactional nature of the consumer business, every enterprise lead is a give and take to win the business which may include device subsidies or for free, depending on the deal. </span></div><div><span style="font-family: arial;"><br /></span></div><div><span style="font-family: arial;">Similar to starting from scratch in the business (read small business segment), T-Mobile had claimed amazing growth. Somewhat the same can be said in the enterprise space as T-Mobile is getting its legs together in these easier to understand WFX connectivity solutions to complement more complex service (e.g., MDM, security, contact center, etc.) sales. It will still come down to the enterprise sales teams to make the case, rebuff competitors and close the deals.</span></div><br /><div><br /></div></div><div><br /></div>556 Ventureshttp://www.blogger.com/profile/08323882447629466573noreply@blogger.comtag:blogger.com,1999:blog-1700935316484269836.post-86266046886734366402020-10-29T14:36:00.006-04:002020-10-29T14:36:52.968-04:00AT&T Handset Supercycle and Retaining the iPhone base? <p>AT&T has veered from its long time conservative promotional activity, relative to its peers. With so many M&A and then integration irons in the fire, the gross add wireless business seemed to take a back seat. However with the Apple iPhone 12 launch, AT&T has made its most aggressive move to date. That is an iPhone 12 can be obtained for free, a $800 value. Of course the conditional unlimited plan, minimum trade-in and 30 month installments apply. Moreover, the $800 can be applied against the 12 Pro and likely the 12 Pro Max model. To be sure, in a switcher world, the best promotions are reserved for those who jump carriers, or existing users adding a new line.</p><p>What's different this year is that this promotion is opened to existing subscribers without a new line condition. Though this seemed to be widely noted with the iPhone 12 launch, a similar flagship device promotion happened in September with the Samsung Note 20 5G where a subscriber may get that device for free with similar conditions. Still, it wasn't an iPhone.</p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://1.bp.blogspot.com/-mZBPY2cCW94/X5iIaAZsl5I/AAAAAAAAGUU/x4ksLV7QOVk1FyUkQY3Cs1AXK94ExKs1ACNcBGAsYHQ/s1192/Screen%2BShot%2B2020-10-27%2Bat%2B4.50.52%2BPM.jpg" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="441" data-original-width="1192" height="237" src="https://1.bp.blogspot.com/-mZBPY2cCW94/X5iIaAZsl5I/AAAAAAAAGUU/x4ksLV7QOVk1FyUkQY3Cs1AXK94ExKs1ACNcBGAsYHQ/w640-h237/Screen%2BShot%2B2020-10-27%2Bat%2B4.50.52%2BPM.jpg" width="640" /></a></div><div><p></p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://1.bp.blogspot.com/-i-JkvNUhXJU/X5iIaZap5gI/AAAAAAAAGUY/UcpkNqHNmEEFnbnn1EfpFn0UcE7kgtjlwCNcBGAsYHQ/s953/VZ%2B-%2BT%2BPostpaid%2BUpgrade.jpg" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><br /></a></div></div><div><h3 style="text-align: left;"><b>Why It Matters</b></h3></div><div>AT&T's multi-year iPhone exclusivity deal allowed it to build a large high-value base. Despite losing that exclusivity in 2011 and 2013 to competitors, iPhone customer accounts generate higher ARPA bearing revenue. Yet despite formidable switching attacks from T-Mobile over the years, AT&T has determined 4Q20 as its time to fight back. Why?</div><div><br /></div><div>The device "supercycle" moniker speaks to the 5G rollouts across the domestic landscape in that carriers needed to move their older device base to upgrade. In doing so, they would realize a better user experience from all the network improvements in the past and future year(s). AT&T's tangible benefits include reduced postpaid churn (i.e., 30 month installment) and higher ARPU/ARPA (i.e., requisite unlimited plan). </div><div><br /></div><div>In terms of timing, AT&T has been a leader(?) in with the lowest postpaid upgrade rate for over 20 quarters. This speaks to its conservative promotional activity. By contrast, its conservative peer, Verizon reported higher upgrade rates. To be sure, the combination of AT&T conservative approach and competitors' aggressive promotions resulted in poor gross/net add performance and even net losses in some quarters. </div><div><a href="https://1.bp.blogspot.com/-i-JkvNUhXJU/X5iIaZap5gI/AAAAAAAAGUY/UcpkNqHNmEEFnbnn1EfpFn0UcE7kgtjlwCNcBGAsYHQ/s953/VZ%2B-%2BT%2BPostpaid%2BUpgrade.jpg" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="653" data-original-width="953" height="438" src="https://1.bp.blogspot.com/-i-JkvNUhXJU/X5iIaZap5gI/AAAAAAAAGUY/UcpkNqHNmEEFnbnn1EfpFn0UcE7kgtjlwCNcBGAsYHQ/w640-h438/VZ%2B-%2BT%2BPostpaid%2BUpgrade.jpg" width="640" /></a><p><br /></p><p><b><br /></b></p><p><b><br /></b></p><p><b><br /></b></p><p><b><br /></b></p><p><b><br /></b></p><p><br /></p><br /><br />On its 3Q20 earnings call, AT&T CEO Stankey noted that the iPhone promotion is a means to reward the longtime iPhone customer base. It's clear that Apple jumping on the 5G bandwagon was a key factor in the promotion calculation. If all goes well, Stankey stated with HBO Max adoption, new mobile unlimited plans coupled with a 5G handset cycle would be a key wireless service revenue driver for the backhalf of 2020. My own retail and customer care checks suggest this iPhone promotion is incredibly popular with desired color variants backlogged until December. </div><div><br /></div><div>It's unclear when the promotion will end as reps didn't have any end date in their systems. If successful, we can expect to see AT&T's device upgrade rate for 4Q20 spike higher than many previous 4Qs. Promotions are of course a part of the business and it will be interesting to see when the promotion ends, traditionally before Black Friday or keep the momentum throughout to the end of the year. There are likely AT&T business case people who have gamed the right threshold of promotion tied to new and existing subscribers counts, expected plan upsell and device subsidy levels. Looking ahead, it appears AT&T has a lot of retention momentum for 4Q20. </div><div><br /></div><div><br /><p></p><div class="page" title="Page 7"><div class="layoutArea"><div class="column"><p><br /></p><p></p><div class="separator" style="clear: both; text-align: center;"><br /></div><p><br /></p></div></div></div></div>556 Ventureshttp://www.blogger.com/profile/08323882447629466573noreply@blogger.comtag:blogger.com,1999:blog-1700935316484269836.post-6236713525255248202020-09-14T11:10:00.003-04:002020-09-14T11:10:40.604-04:00A New Verizon - Embracing Prepaid with a Tracfone Acquisition<p>Verizon announced its intention to <a href="https://www.verizon.com/about/news/verizon-to-acquire-tracfone" rel="nofollow" target="_blank">acquire</a> America Movil's US Tracfone property which includes not only the Tracfone brand but also nine other prepaid brands. The Tracfone property brings ~21M subscribers, 90K distribution doors and 850 employees. </p><div class="separator" style="clear: both; text-align: center;"><a href="https://1.bp.blogspot.com/-yQABfdZDHrc/X195ezyTFLI/AAAAAAAAGRE/SqPdWOppHlYIZ8v2-3U004XLam7oTVIBwCNcBGAsYHQ/s597/tracfone%2Bsub%2Bbrands.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="237" data-original-width="597" height="159" src="https://1.bp.blogspot.com/-yQABfdZDHrc/X195ezyTFLI/AAAAAAAAGRE/SqPdWOppHlYIZ8v2-3U004XLam7oTVIBwCNcBGAsYHQ/w400-h159/tracfone%2Bsub%2Bbrands.png" width="400" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><br /><p><span style="font-family: inherit;">The transaction <span style="background-color: white; caret-color: rgb(33, 37, 41); color: #212529;">will include $3.125 billion in cash and $3.125 billion in Verizon common stock and also includes up to an additional $650 million in future cash consideration related to the achievement of certain performance measures and other commercial arrangements. Expected deal close is 2H21.</span></span></p><p><span style="font-family: inherit;"><span style="background-color: white; caret-color: rgb(33, 37, 41); color: #212529;"><br /></span></span></p><p><span style="font-family: inherit;"><span style="background-color: white; caret-color: rgb(33, 37, 41); color: #212529;"><b>Why It Matters</b></span></span></p><p><span style="background-color: white;"><span style="color: #212529; font-family: inherit;"><span style="caret-color: rgb(33, 37, 41);">The </span></span><span style="color: #212529;"><span style="caret-color: rgb(33, 37, 41);">old</span></span><span style="color: #212529; font-family: inherit;"><span style="caret-color: rgb(33, 37, 41);"> Verizon of old is gone in which it eschewed or minimized its prepaid operations for the chase of higher ARPU bearing postpaid users. Surprisingly after 10 quarters of net prepaid losses, 2Q20 showed a positive net adds. </span></span></span></p><p><span style="background-color: white;"><span style="color: #212529;"></span></span></p><div class="separator" style="clear: both; font-family: inherit; text-align: center;"><span style="color: #212529;"><a href="https://1.bp.blogspot.com/-FdzufPDRKVA/X197axLAHKI/AAAAAAAAGRQ/7ArkNWsSrvg2LWmlmPTtp8XLVAvjJ18nQCNcBGAsYHQ/s768/VZ%2BPrepaid.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="494" data-original-width="768" height="258" src="https://1.bp.blogspot.com/-FdzufPDRKVA/X197axLAHKI/AAAAAAAAGRQ/7ArkNWsSrvg2LWmlmPTtp8XLVAvjJ18nQCNcBGAsYHQ/w400-h258/VZ%2BPrepaid.png" width="400" /></a></span></div><div class="separator" style="clear: both; font-family: inherit; text-align: center;"><span style="color: #212529;"><br /></span></div><div class="separator" style="clear: both; font-family: inherit; text-align: left;"><span style="color: #212529;">As of 2Q20, prepaid only accounted for ~4M users (~4%) of the ~94M retail base. Tracfone by far has been the largest prepaid player and (if closed by 2H21), Verizon will be the largest prepaid player with ~25M subs. As of 2Q20, competitors' prepaid bases:</span></div><div class="separator" style="clear: both; font-family: inherit; text-align: left;"><ul style="text-align: left;"><li><span style="color: #212529;"><span style="font-family: inherit;">AT&T (~18M) </span></span></li><li><span style="color: #212529;"><span style="font-family: inherit;">T-Mobile (~11+M) </span></span></li><li><span style="color: #212529;"><span style="font-family: inherit;">DISH (~9M) </span></span></li></ul></div><span style="color: #212529;"><span style="font-family: inherit;">Moreover, the Tracfone unit reported >$8B in revenue which helps to provide a </span>purely<span style="font-family: inherit;"> wireless growth story even when the other strategic bets didn't pan out (e.g., Yahoo/AOL, Oath, Terremark, etc). But Verizon could be in the driver's seat as Tracfone's America Movil parent has been absorbing years of net losses with the only bright spot in 2Q20 in which the unit beat out its competitors in net adds with 214K.</span></span><div><span style="color: #212529;"><span style="caret-color: rgb(33, 37, 41);"><br /></span></span></div><div><span style="color: #212529;"><div class="separator" style="clear: both; text-align: center;"><a href="https://1.bp.blogspot.com/-e3CxW-phFi8/X1-FOCEriYI/AAAAAAAAGRs/C8MqzvvZX1E6jiwNWAs7MkvWQ9mqHYY7ACNcBGAsYHQ/s595/AMUSA%2B.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="374" data-original-width="595" height="251" src="https://1.bp.blogspot.com/-e3CxW-phFi8/X1-FOCEriYI/AAAAAAAAGRs/C8MqzvvZX1E6jiwNWAs7MkvWQ9mqHYY7ACNcBGAsYHQ/w400-h251/AMUSA%2B.png" width="400" /></a></div><div><br /></div><div><b>Looking Ahead</b></div><div><br /></div><div>Verizon could work the new acquisition in ARPU to drive greater revenue as Tracfone's ARPU has been steadily increasing to $28 partly due to the strength of Straight Talk. There is room to grow with peers' prepaid ARPU in the mid to high $30s. Going forward, it remains to be seen in 2H21 what Verizon will do with the multitude of value brands, whether to shrink and focus or leave under the notion that each value segment is important. My bet is consolidation as 10 brands on to of Verizon Prepaid, Visible and Yahoo Mobile is quite the stuffed portfolio. </div><span style="caret-color: rgb(33, 37, 41);"><br /></span></span><div><span style="color: #212529;"><br /><span style="caret-color: rgb(33, 37, 41); font-family: inherit;"><br /></span></span><p></p><p><span style="font-family: inherit;"><span style="background-color: white; caret-color: rgb(33, 37, 41); color: #212529;"><br /></span></span></p><p><br /></p></div></div>556 Ventureshttp://www.blogger.com/profile/08323882447629466573noreply@blogger.comtag:blogger.com,1999:blog-1700935316484269836.post-84453292564578085122020-07-24T12:31:00.003-04:002020-07-24T12:49:12.574-04:00AT&T 5G Nationwide Milestone & Then Some<div dir="ltr" style="text-align: left;" trbidi="on">
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At the 2Q20 AT&T earnings call, CFO Stephens quickly stated that AT&T had achieved nationwide 5G capability. None of the financial analysts caught it or asked follow-ups. At the call’s end, the <a href="https://about.att.com/story/2020/att_5g_nationwide.html" target="_blank">press release came ou</a>t. <o:p></o:p></div>
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Key highlights for the people who are TLDR:<o:p></o:p></div>
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<!--[if !supportLists]-->-<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;"> </span><!--[endif]-->Cricket’s premium Unlimited Plus plan is 5G enabled<o:p></o:p></div>
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<a href="https://1.bp.blogspot.com/-z4VPqV9T4Ys/XxsMvhOAN-I/AAAAAAAAGOs/DS-_sPOiGZ4I5JdNoyLN7a3M9EMEOA5igCNcBGAsYHQ/s1600/ATT%2B5G%2BNationwide.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="265" data-original-width="616" height="170" src="https://1.bp.blogspot.com/-z4VPqV9T4Ys/XxsMvhOAN-I/AAAAAAAAGOs/DS-_sPOiGZ4I5JdNoyLN7a3M9EMEOA5igCNcBGAsYHQ/s400/ATT%2B5G%2BNationwide.jpg" width="400" /></a></div>
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I was fortunate to share a subject call other analyst colleagues and former boater and possibly future RV king AT&T’er Gordon Mansfield to get more detail. Here are some relevant points:<o:p></o:p></div>
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<!--[if !supportLists]--><span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri; mso-hansi-font-family: Calibri;"><span style="mso-list: Ignore;">-<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]-->Nationwide = 205 million POPs covered with dedicated 850 MHz & future sub-6 spectrum where it makes sense; doesn’t count its commercial mmW<o:p></o:p></div>
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<!--[if !supportLists]--><span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri; mso-hansi-font-family: Calibri;"><span style="mso-list: Ignore;">-<span style="font: 7.0pt "Times New Roman";"> </span></span></span>DSS is active in pockets of Florida & Texas<o:p></o:p></div>
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<!--[if !supportLists]--><span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri; mso-hansi-font-family: Calibri;"><span style="mso-list: Ignore;">-<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]-->DSS & mmW are commercial already but isn’t a factor in this announcement<o:p></o:p></div>
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<!--[if !supportLists]--><span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri; mso-hansi-font-family: Calibri;"><span style="mso-list: Ignore;">-<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]-->Current 5G implementation is Non-standalone (NSA) but feverishly testing Standalone (SA) <o:p></o:p></div>
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<b>Why it Matters</b><o:p></o:p></div>
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<b><br /></b></div>
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<!--[if !supportLists]--><span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri; mso-hansi-font-family: Calibri;"><span style="mso-list: Ignore;">-<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]-->The national coverage marketing milestone is a large part of the ‘5G Race’ as hyped and billed by industry and the government. While the full nationwide POP coverage is ~320M POPs, 200 may seem like a shortfall. For reference, LTE introduced in late ’10 and early ’11 started with a phased approach. BUT when DSS comes in, theoretically, a true 300M+ target may be realized as 5G will include existing LTE bands/coverage.<o:p></o:p></div>
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<!--[if !supportLists]--><span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri; mso-hansi-font-family: Calibri;"><span style="mso-list: Ignore;">-<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]-->Every carrier seems to be fast tracking to 5G SA with announced trials. Of course there are services/revenues to unlock when that day comes. T-Mobile and Verizon have discussed using SA in 2020 and with peer pressure, it’s likely AT&T will also have 2020 rollout. SA makes everything better and will be the trigger for a broader DSS rollout.<o:p></o:p></div>
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<!--[if !supportLists]--><span style="mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-fareast-font-family: Calibri; mso-hansi-font-family: Calibri;"><span style="mso-list: Ignore;">-<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]-->As an aside - AT&T tells me that they’re ready to deploy standalone 5G to its customers in Argentina and Colombia this summer. Wow! South Americans are ahead of North America. <o:p></o:p></div>
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<!--[if !supportLists]-->-<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;"> </span><!--[endif]-->5G enabled plans are an important consideration for the future as to take advantage of the technology, you not only need a 5G device, you need the right 5G plan. This means that legacy plans will access 5G tech even if a subscriber BYOD a 5G capable device. There’s no forced migration per se but certainly a way to move early adopters to the new plan portfolio.<o:p></o:p></div>
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<!--[if !supportLists]-->-<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;"> </span><!--[endif]-->The 5G network has to be there for carriers to sell devices and every carrier is in the same boat. Everyone is looking to Apple to determine whether it will support 5G in its traditional Fall iPhone debut. Given that the AT&T subscriber base is well north of 50%, you’d think they (and other peers) are pushing Apple. For AT&T and Verizon, it’s also about mmW in addition to sub-6GHz support. <o:p></o:p></div>
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556 Ventureshttp://www.blogger.com/profile/08323882447629466573noreply@blogger.comtag:blogger.com,1999:blog-1700935316484269836.post-12866169867674627472020-02-11T12:16:00.001-05:002020-02-11T12:18:40.189-05:00T-Mobile Sprint Deal Done – Integration <div dir="ltr" style="text-align: left;" trbidi="on">
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Now that the T-Mobile acquisition of Sprint has been blessed, when will integration start? As we all know it’s been a lengthy journey since the $26B deal’s announcement in April 2018. In September 2018, T-Mobile announced Sunit Patel to head merger and integration efforts.<o:p></o:p></div>
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<a href="https://1.bp.blogspot.com/-Q9PhIEP3byM/XkLh6vC9GeI/AAAAAAAAF2o/0-2Wm1tpFLwBflNmipBqAFtI7I11Mx5oACNcBGAsYHQ/s1600/acasatro_180430_1777_sprint_Tmobile_0003.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1050" data-original-width="1400" height="240" src="https://1.bp.blogspot.com/-Q9PhIEP3byM/XkLh6vC9GeI/AAAAAAAAF2o/0-2Wm1tpFLwBflNmipBqAFtI7I11Mx5oACNcBGAsYHQ/s320/acasatro_180430_1777_sprint_Tmobile_0003.jpg" width="320" /></a></div>
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Flash forward to February 2020, while T-Mobile and Sprint could not work closely on integration efforts, they’ve had a long runway in planning. Here are the key integration areas in my view:<o:p></o:p></div>
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<!--[if !supportLists]--><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">1.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]-->Executives and employees: Like in most mergers and acquisitions, people are the first to come to mind. It’s almost certain that the acquiring company will win out in the executive suites. Overlapping areas such as human resources, marketing, engineering, operations and retail are likely to have been gamed out already, with few refinements. The big if is making good on the promise that the acquisition/merger will be job accretive.<o:p></o:p></div>
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<!--[if !supportLists]--><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">2.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]-->Physical headquarters: It’s no secret that T-Mobile has expanded and updated their Bellevue spaces while Sprint’s offices, including the Overland Park campus has contracted. Similar to competitors AT&T and Verizon, key executives will be expected to relocate to the Bellevue power center.<o:p></o:p></div>
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<!--[if !supportLists]--><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">3.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]-->Suppliers: Mergers always take a toll on suppliers. That is if they sold to two, now they’ll sell to one. Invariably, that is part of the synergies calculation – suppliers may see reduced revenue because the new company will have better buying scale (on top of Softbank and DT added to the equation). However, since Sprint was cost cutting, there could be some spending bumps down the line.<o:p></o:p></div>
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<!--[if !supportLists]--><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">4.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]-->Infrastructure: T-Mobile has always highlighted the faster than usual of MetroPCS. That is the decommissioning of their CDMA, repurposing the spectrum and lowering overlapping operational costs. Indeed, Sprint is still on CDMA and it’s a strategic imperative to move those users (direct subs & wholesale partners) off so they may take advantage of PCS and move the 800 to DISH. <o:p></o:p></div>
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<!--[if !supportLists]--><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">5.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]-->Distribution: While Sprint has been contracting their distribution, T-Mobile made commitment to expanding its doors. Where there is overlap (i.e., T-Mobile and Sprint retail within a block or two), those retail shops could be sold to DISH as they will need to have postpaid retail presence beyond its prepaid Boost locations. <o:p></o:p></div>
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I’m going to go out on a limb and guess the new T-Mobile integration will hit the ground running this week as the plans have already been put in place. I’d expect some of the areas I touched on above (e.g., headcount/org chart/exit packages) will be announced within a week or week and a half, if not sooner. <o:p></o:p></div>
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556 Ventureshttp://www.blogger.com/profile/08323882447629466573noreply@blogger.comtag:blogger.com,1999:blog-1700935316484269836.post-59013762193732233472019-08-01T22:46:00.000-04:002019-08-02T10:37:55.526-04:002Q19 America Movil Prepaid - Still Bleeding but Moving Some KPIs<div dir="ltr" style="text-align: left;" trbidi="on">
<div class="OutlineElement Ltr BCX4 SCXW245758216" style="-webkit-user-drag: none; -webkit-user-select: text; caret-color: rgba(0, 0, 0, 0.847059); clear: both; color: rgba(0, 0, 0, 0.847059); cursor: text; direction: ltr; font-family: "Segoe UI", "Segoe UI Web", Arial, Verdana, sans-serif; font-size: 12px; margin: 0px; overflow: visible; padding: 0px; position: relative;">
<div class="Paragraph SCXW245758216 BCX4" paraeid="{65c80d27-4104-4d9a-bbdf-e946d163f3e8}{138}" paraid="274599836" style="-webkit-nbsp-mode: normal !important; -webkit-user-drag: none; -webkit-user-select: text; color: windowtext; padding: 0px; vertical-align: baseline; word-wrap: break-word;">
<span class="TextRun SCXW245758216 BCX4" data-contrast="auto" lang="EN-US" style="font-family: "times new roman" , "times new roman_msfontservice" , serif; font-size: 12pt; line-height: 20.504166666666666px; margin: 0px; padding: 0px;" xml:lang="EN-US">For eleven quarters now, America Movil USA has been losing subscribers. For 2Q19, it was 164,0000. To be sure that is a big number and with a half glass full view, it's better than the same quarter a year ago with 635,000 losses. As usual, its Safelink brand brought the most headache with 95,000 followed by 42,000 at the other brands. Surprisingly, the positive Straight Talk growth engine lost 30,000. This speaks to the competitive environment within the prepaid segment.</span></div>
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<span class="TextRun SCXW245758216 BCX4" data-contrast="auto" lang="EN-US" style="font-family: "times new roman" , "times new roman_msfontservice" , serif; font-size: 12pt; line-height: 20.504166666666666px; margin: 0px; padding: 0px;" xml:lang="EN-US">Still, the company's subscriber base is still formidable with 21.4 million subscribers but T-Mobile with 21.3 million will likely surpass America Movil as the largest US prepaid provider next quarter or the following. For those who are keeping track, AT&T is less than 4 million behind T-Mobile. </span></div>
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One can argue these new losses have shrunk relative to the massive numbers in 2017 and 2018. Yet to the company's credit, there some some positive key performance indicators (KPI), churn and ARPU. Churn has moved from mid-4% to a decent 3.7% level this quarter. ARPU has risen to $26 now from $20 at EOY '15, $24 at EOY '17 and somewhat stable at $26 at EOY '18. Overall quarterly revenue has wavered slightly above and below the $2B mark. </div>
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<b>Why It Matters</b></div>
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It's clear that the big, no huge, loss quarters are slowly going away but Safelink continues to be an albatross around the company's neck. Straight Talk growth to offset some loss isn't assured as prepaid competition continues to be a two horse race between T-Mobile and AT&T. Based on trends, America Movil USA will cede its position as the 2nd largest US prepaid player. </div>
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The company may be allowing the shedding of customers to trade for ARPU and revenue lift by focusing on its flagship Straight Talk brand. Looking ahead as a '19 goal, crossing from negative to positive growth would be a momentous milestone. </div>
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556 Ventureshttp://www.blogger.com/profile/08323882447629466573noreply@blogger.comtag:blogger.com,1999:blog-1700935316484269836.post-66994385349189490872019-07-11T17:36:00.003-04:002019-07-12T14:17:22.872-04:002019 SHAPE-ing 5G + Other Things<div dir="ltr" style="text-align: left;" trbidi="on">
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The annual AT&T Shape event at the Warner Brothers Studio in Burbank, California promised to be one that explored the convergence of technology and entertainment. This was my second Shape (first <a href="https://blog.556ventures.com/2018/06/at-re-shaping.html" target="_blank">write-up here</a>) visit. There were differences and similarities. My view last year was that AT&T was finally showing off the content side of the acquisition that was approved in June 2018. </div>
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As Shape is open to the public, it is positioned to be a nice public relations event where the AT&T can show off its service and content wares, provide an outlet for hopeful content creators to reallize their dreams and to further its brand. </div>
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The big areas that pervaded in 2018 and this year were: VR/AR (or XR), content and 5G. Some content and XR demos were complementary (duh) but 5G demos have move a bit closer to reality. </div>
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The longest lines were for the blockbuster franchise Game of Thrones AR demo. The organizers anticipated long lines and displayed a sign indicating a 1.5 hour wait from that point. Still, people waited for the ~5 minute demo that allowed the Magic Leap gear wearing attendee to <a href="https://youtu.be/yqQiMAGG_ic" target="_blank">dispatch some GOT baddies with weapons</a>. </div>
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And Magic Leap was a big presence in the demos beyond GOT. Magic Leap had their own area demoing several AR possibilities. I have to say that the graphics and demos weren't overly impressive BUT in '18, there were no public demos. Magic Leap (with help from AT&T <a href="https://www.magicleap.com/news/press-release/magic-leap-series-d-investment-at-and-t" target="_blank">investment</a>) has come a long way to actually producing product and delivering something tangible. <br />
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To be fair, tech follows an evolutionary path and there should be no hesitation that future demos will get better and more compact. And with the AT&T investment, it makes sense that Magic Leap gets a spotlight session. AT&T's Communications CEO John Donovan and Magic Leap CEO Rony Abovitz talked about Abovitz's vision on what he coined as Magicverse. The description is "... <i>a large scale canvas for creatives, with Magic Leap merging the digital and the physical worlds to create a new reality with 5G</i>" <br />
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The embedded video should be watched for what this man's ideas are. It's worth it. I look forward to next year's update.<br />
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As previously noted, some of the 5G exhibits (powered by a 39 GHz base station) have some more meat on them. Where in the mainstream press and carrier marketing have been pushing high throughput speeds with every 5G launch, it was refreshing to see AT&T focus on latency as a benefit. However, it's tough to get this concept across to a consumer audience. There was a colleague who had an AT&T Samsung Galaxy S10 5G and he showed off some >1 Gbps speeds and everyone who saw this was already conditioned to expect that. AT&T and some other exhibits showed off some simple latency demos, not as any product or service but as more of education.<br />
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Ericsson's arcade games provided a reference between 5G and LTE latency. In my view, the industry is now using speed as a crutch for 5G because it's what the public has been conditioned to over the 8-9 years of LTE usage. The industry needs to move towards latency education somehow.<br />
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The consumer use case is likely AR/VR and cloud gaming but that won't be here for a couple of years. Lastly, the content and empowerment message was live and well with several sessions. I pick two that stood out for me as excellent. First, it was <i>The Scully Effect - I Want to Believe in STEM </i>that discussed the role that Gillian Anderson's X-File's character, Agent Scully came to inspire a generation of women to enter Science Technology Engineering and Math.<br />
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Second, <i>Technology and Future of Sports,</i> though focused on the NBA can extrapolate into other sports with the vision of moving a couch spectator to one that is seemingly immersed is phenomenal.</div>
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While other carriers have their 5G vision demos here and there, AT&T's Shape sits uniquely to open up a wide stage for the public to see where content and tech are going. Here's to the 2020 Shape where my expectation is that the tech demos will go beyond educational.</div>
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556 Ventureshttp://www.blogger.com/profile/08323882447629466573noreply@blogger.comtag:blogger.com,1999:blog-1700935316484269836.post-21446567572488083592019-06-17T15:03:00.002-04:002019-06-17T15:03:21.769-04:00AT&T's Prepaid Growth Story<div dir="ltr" style="text-align: left;" trbidi="on">
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If one looks at the last couple of quarters of net add performance, the prepaid market seems to be flattening. Powerhouses Metro by T-Mobile and Cricket which had dominated with large net additions have dropped from their high go-go growth past days. Prepaid competition has always been tough and will certainly continue. The drama in the T-Mobile/Sprint deal where uncertainty and change has brought concern to the dealer networks and employee bases, AT&T is standing out as the stable ship. <o:p></o:p></div>
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To appreciate the AT&T's prepaid growth story, it began with the <a href="https://www.att.com/gen/press-room?pid=24533&cdvn=news&newsarticleid=36744" target="_blank">Leap acquisition</a> announced in July of '13 and closed in <a href="https://about.att.com/story/att_completes_acquisition_of_leap_wireless.html" target="_blank">March of '14</a>. Between the acquisition announcement and the close, Leap's subscriber base shrunk from about 5 million to over 4.5 million. With Leap, AT&T's prepaid base moved to about 10 million subscribers at the close. The Leap brand, Cricket, though known was declining and had an impact on AT&T's results in 2014. However, with brand expansion beyond Leap's regional footprint and AT&T's national coverage, the new Cricket began its growth story. Increasing the 'doors' or distribution was central in this effort. This included expanding its dealer network and big box retail.<br />
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From 2015 to 2018, the AT&T prepaid net add annual run tallied over a million subscribers, negating 2014's growing pains which included decommissioning the Leap CDMA network and subscriber device migration. </div>
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As prepaid evolved, it's still attracting a price sensitive segment but low plan price and free/discounted phones are just but several buying considerations. Embedding value is now mirroring postpaid plans. For example, Metro by T-Mobile is including mobile hotspot capability, music, generous Google storage and even Amazon Prime in higher tier plans. For Cricket's part, because of AT&T's Mexican network assets and Canadian roaming agreements, unlimited plan users can roam without charge in those countries. </div>
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Recently, I had the opportunity to chat with John Dwyer, President of AT&T Prepaid on the state of his business. A couple of Cricket highlights came up namely in the area of customer satisfaction triggered by comments made on the 1Q19 earnings call. Though these were selected for the best PR, Chairman Stephenson revealed some important data points: 1) churn was under 3% and 2) Cricket subscribers accounted for 10 of the 17 million base, and had more than doubled since the Leap acquisition close. <br />
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Low churn is a key indicator of customer satisfaction and John reinforced that notion with JD Power wins in purchasing experience and customer satisfaction. As the former head of customer experience, he said that Cricket's net promoter score (NPS) moved from a -7 to now 43. By the way, NPS ranges from -100 to 100. The 10 million Cricket subs suggest that there are 7 million prepaid subs to be share between branded prepaid and prepaid IoT. <o:p></o:p></div>
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<span style="font-family: calibri, sans-serif;">Branded prepaid took a <a href="https://blog.556ventures.com/2019/01/4q18-at-prepaid-momentum-stunted-but.html" target="_blank">shellacking in 4Q18</a> negating most of Cricket's 240K net adds. Observers checking the AT&T branded plans would note a double data promotion on its $50 ($40 with autopay) that runs until the end of July that suspiciously counters a similar promotion at Verizon, which isn't a surprise as each company have been longtime postpaid rivals for the same demographic. This should hold true for each's branded prepaid offerings.</span><div>
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<span style="font-family: calibri, sans-serif;">Back to the growth story - the last two quarters are shockingly lower than the previous 14 quarters. The question is has the growth engine stalled because of overall market trends? Indeed, competitors' previous quarter net addition numbers were comparably lower. One possibility could be on the coat tails of the FirstNet buildout wherein AT&T claims a positive trajectory for postpaid growth. While they cite promotional activity for FirstNet accounts to include families, FirstNet is also going to rural communities in which AT&T has planned on new distribution. While the focus is on postpaid growth, it's logical that prepaid distribution would also follow. It's unclear whether we'll see 300K+ net additions but at least there is a runway. A caveat is that with T-Mobile's 600 MHz expansion, their rural coverage will also increase and prepaid could also follow in increasing distribution, if there is commitment from Seattle (the new power center) versus formerly the MetroPCS HQ of Dallas. In the next year, we'll see how the AT&T prepaid growth engine performs, firing on all cylinders or sputtering. </span><br /><div class="separator" style="clear: both; text-align: center;">
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556 Ventureshttp://www.blogger.com/profile/08323882447629466573noreply@blogger.comtag:blogger.com,1999:blog-1700935316484269836.post-4697649974564496532019-05-14T11:42:00.002-04:002019-05-14T11:42:33.171-04:00CY 1Q19 Sprint Prepaid: Another Down Quarter & Stealing for Postpaid<div dir="ltr" style="text-align: left;" trbidi="on">
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Sprint prepaid has recovered from the previous quarter's 173,000 net losses with only 14,000 losses in CY1Q19. Statistically, they seem to be on the mend. Sprint management has continually citing Boost Mobile's performance and doing heavy competitive lifting against stronger competitors Metro by T-Mobile and AT&T's Cricket. It's no surprise that some T-Mobile and AT&T's net gains came from Sprint prepaid losses. </div>
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However, this is disingenuous as Sprint's prepaid numbers should have formally shown better results. There has been an on-going assignment of better performing (stable paying) subs to Sprint's non-branded postpaid category, thereby enhancing the postpaid number count. For CY1Q19, prepaid to postpaid migrations totaled 129,000. On the postpaid side, the company lost 189,000 phone subs. Without that 'help' from prepaid, the postpaid optics would have worse. Back in CY4Q18, with 173,000 prepaid losses, 107,000 migrated to the postpaid bucket. Then, Sprint posted 26,000 postpaid phone net losses. So the take away is that while prepaid performance is bad, postpaid is in rougher shape without its prepaid unit. <br />
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By no means is Sprint the only carrier using prepaid to postpaid migration accounting to help its postpaid optics. T-Mobile is also expanding its postpaid numbers with this approach, piling onto the string of phenomenal postpaid growth quarters. For 1Q19, 120,000 prepaid migrated to postpaid. What's important here is that they would have beaten AT&T for the 1Q19 prepaid title if they didn't do the migration. <a href="https://blog.556ventures.com/2019/05/1q19-t-mobile-prepaid-slipping-and.html" target="_blank">These migrations allowed T-Mobile to report 656,000 net phone adds</a>. In 4Q18, there were 160,000 prepaid to postpaid which allowed T-Mobile to break one million phone net add mark. Optics is everything in pushing your message.<br />
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Looking at churn, Sprints low 4% churn is highest of the big four prepaid competitors. T-Mobile is at 3.85% and America Movil is at 3.7% in the quarter and <a href="https://blog.556ventures.com/2019/04/1q19-at-prepaid-returns-to-pole-position.html" target="_blank">AT&T's Cricket reported to be sub 3%</a>. On the other end of the spectrum, the non-competitive <a href="https://blog.556ventures.com/2019/04/1q19-verizon-prepaid-sustained-losses.html" target="_blank">Verizon </a>prepaid unit has continually lost prepaid subs and doesn't report its churn. Churn has a lot to do with volatility or stability of the operating unit. <br />
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<b>Why it matters</b>: Without prepaid to postpaid migration accounting, Sprint prepaid appears to be staying somewhat lockstep against competitors in acquiring customers. Since this accounting practice has been in place for many quarters, it's likely that prepaid numbers will continue to assist any Sprint postpaid 'recovery.'<br />
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There has been continuous talk about T-Mobile and Sprint shedding its prepaid assets as one or one of several conditions of regulatory approval. It's no surprise, if that is the case, that Boost is the sacrificial lamb with its 8.8 million subs versus the more successful T-Mobile's 21.2 million. T-Mobile can argue that they can keep its own prepaid unit as a counterweight to America Movil's 21.6 million count. America Movil management has also publicly stated that they'd be willing to look at adding subs from any merger shedding. However, that would put them squarely ahead as the prepaid giant with close to 30 million subs. How well would those optics look? Yet with all this conjecture, we won't know until a decision happens in June or July.<br />
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556 Ventureshttp://www.blogger.com/profile/08323882447629466573noreply@blogger.comtag:blogger.com,1999:blog-1700935316484269836.post-13144871707997641822019-05-07T11:45:00.002-04:002019-05-07T13:35:31.841-04:001Q19 America Movil USA Prepaid – Recovering and Shifting<div dir="ltr" style="text-align: left;" trbidi="on">
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America Movil with over 21.6 million subscribers is the largest US prepaid player in 1Q19, closely followed by T-Mobile (21.2M), AT&T (17.2M), Sprint ([CY 4Q18] 8.9M) and finally Verizon (4.48M). With many prepaid operating brands absorbed throughout the years and the backing of its Mexican-based parent, the company is still a prepaid force but has ceded prepaid leadership to AT&T and T-Mobile. To put it in perspective, America Movil USA reached its corporate high of over 26 million subscribers in 4Q14.</div>
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Similar to Sprint, its bet on lifeline services (SafeLink) has punished its subscriber base count with continued losses. Partially offsetting this downward pressure has been the shift from non-recurring plans, such as pay as you go, to higher ARPU bearing monthly plans. Chiefly, Straight Talk (available at Walmart and ~43% of its overall base) has been its growth engine for many quarters while the other brands have declined. To understand the significance of Straight Talk and SafeLink, the two are highlighted in quarterly earnings reports along with an Other Brands category (~44% of the base). <o:p></o:p></div>
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For the quarter, there seems to be a recovery of sorts, relative to the big losses in 2017 and 1H18. With <b><i>only</i></b> 89,000 net losses, the company contrasts that to 1Q18's 371,000 losses and 1Q17's 1.3 million. The focus on the higher-ARPU bearing Straight Talk with 175,000 additions has helped its ARPU rise for the quarter to $26, contrasting to 1Q18's $24, 1Q17's $23 and 1Q16's $21. Another provided metric, churn is now at 3.7% where in previous quarters were north of 4%.</div>
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<b>Why it Matters: </b>From the above chart, the truly bad days seem to be behind the company but SafeLink will likely continue to contribute to the losses. Though losses are less for the quarter, the US business unit's EBITDA margins is a measly 6.2% compared to the high 20s to low 40s of other America Movil's business units. Also, rewinding four years, the US business unit's 1Q15's EBITDA margin was 11.7%. This suggests that it's been a truly competitive prepaid environment and the biggest MVNO is just getting by. </div>
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There have been suggestions that America Movil may be in a position to acquire a spun off Sprint prepaid unit as a possible condition of a T-Mobile/Sprint go-ahead. America Movil management has indicated receptiveness to that as buying companies to increase the US opportunity has always been in the playbook. By no means are they the default winner as there are other parties vying for a parted out Sprint prepaid unit, if the occasion arises. We'll know in June/July?</div>
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556 Ventureshttp://www.blogger.com/profile/08323882447629466573noreply@blogger.comtag:blogger.com,1999:blog-1700935316484269836.post-15357745102668607232019-05-03T11:30:00.001-04:002019-05-03T11:30:50.955-04:001Q19 T-Mobile Prepaid -– Slipping and Sliding in the Postpaid Shadow<div dir="ltr" style="text-align: left;" trbidi="on">
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T-Mobile has outperformed its rivals for many quarters. Postpaid growth has been its consistent flagship that many focus on. To complement the postpaid rocket ship, MetroPCS’ expansion perhaps put the cherry on top. Today, postpaid is still growing but prepaid has been slipping since 2Q17, when AT&T prepaid pushed ahead. Throughout the quarters, questions were asked about why prepaid has slowed. Many times, the corporate answer is that the lines are blurring between prepaid and postpaid. However, T-Mobile had made it easier for those who were deemed less than prime customers to access postpaid plans, thereby adding them to the postpaid count. Those prepaid to postpaid migrations have been highlighted consistently for many quarters. We all get it, postpaid customers bear higher revenue, they tend to churn less and more are more stable. To be sure, the goodies of T-Mobile Tuesdays and free Netflix are also nice value draws.<o:p></o:p></div>
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Still, prepaid to postpaid migration takes away from the Metro by T-Mobile subscriber base and its posted revenues. With this, there has to be tension between Dallas-based Metro (and its dealers) and corporate in Seattle. The halcyon monster growth quarters from 2Q15 to 1Q17 are over while postpaid continues its march. In 1Q16, the prepaid group posted a record high 807,000 net adds but in 3Q18, it had dropped to a low of 35,000. By the way, at the end of that quarter, Metro by T-Mobile rebranding was rolled out. Perhaps reinforcing MetroPCS was T-Mobile would help. 4Q18 was ‘okay’ but 1Q19’s 69,000 contrasted starkly against 1M+ postpaid net adds. To add salt to the wounds, 120,000 net prepaid customers migrated to branded postpaid.<o:p></o:p></div>
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Is the prepaid group slipping? From the growth view, yes. Yet the argument in a decreasing churn trend could be pointed as progress. In the last 4 quarters, the highest churn at 4.12% (3Q18) has dropped to 3.85%, lower sequentially (3.99%) and even YoY (3.94%). That’s progress, right? BUT, AT&T’s Cricket Wireless is sub 3%, an astounding feat for prepaid. </div>
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However, ARPU has slipped to $37.65 from $38.90 YoY and also sequentially. Some can argue this is inconsequential yet from an overall prepaid revenue contribution, 1Q19’s $2.38B contrasts with 1Q18s $2.4B. But postpaid continues to deliver with upward trends in net additions, revenue and low churn. <o:p></o:p></div>
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<b>Why it matters:</b> Perhaps the company is paying attention. There is that thorny prepaid group integration task if and when the Sprint acquisition happens. To that end, longtime MetroPCS head Tom Keys is moving out of that role to work on the integration and transition task. After that, Mr. Keys will be retiring (likely with a non-compete). Metro staff will have <a href="https://www.geekwire.com/2019/internal-memo-t-mobile-shakes-marketing-leadership-integrate-metro-launch-confidential-new-initiative/" style="color: #954f72;">new corporate EVP bosses in the form of Jon Frier (sales) and Matt Staneff (marketing)</a> based in Seattle. This is a rub for dealers as they’ve had deep and trusting relationships with the Dallas-based Keys. How will their voices be heard when these EVPs have a bigger ball of wax to run, given the corporate focus on postpaid? <b><o:p></o:p></b></div>
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Dealer performance and happiness in the end affects T-Mobile’s prepaid numbers. T-Mobile corporate will have to navigate their distribution’s discontent and concern in making or losing money. Presumably Mr. Keys will advocate for the brand that he has helped built and we shall see what develops. Will Seattle drive new prepaid (non-loss leader) promotions to bring the prepaid group back? We shall see. <o:p></o:p></div>
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<b>Afterthought:</b> What if the Sprint deal fails? What will Tom Keys do and will the Dallas to Seattle reporting and control structure remain in place?</div>
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556 Ventureshttp://www.blogger.com/profile/08323882447629466573noreply@blogger.comtag:blogger.com,1999:blog-1700935316484269836.post-26306670679846815402019-04-30T17:50:00.002-04:002019-05-01T07:30:45.792-04:001Q19 AT&T Prepaid Returns to the Pole Position <div dir="ltr" style="text-align: left;" trbidi="on">
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Last quarter, AT&T ceded its prepaid net add position to T-Mobile. AT&T had led five out of the last eight quarters. With the acquisition Leap Wireless and its Cricket brand, AT&T slowed the MetroPCS juggernaut that had been dominating the prepaid sector since T-Mobile bought them. Both companies had a similar playbook, de-commission the old CDMA network and expand brand and distribution beyond the old regional footprints. For people playing wireless industry Trivial Pursuit, MetroPCS’ kickoff expansion was coined “Apollo 15.” To put it in a competitive context, from 1Q15-4Q18, AT&T and T-Mobile accounted for over 10 million net additions while competitors were in negative territory. <o:p></o:p></div>
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AT&T<o:p></o:p></div>
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5.24M<o:p></o:p></div>
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5.14M<o:p></o:p></div>
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-1.66M<o:p></o:p></div>
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America Movil<o:p></o:p></div>
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-4.33M<o:p></o:p></div>
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Fast forward to 1Q19 results, we find that even with 96,000 net adds (85,000 were phone net adds), AT&T won out against T-Mobile’s 69,000. This is a recovery of sorts against a shocking 4Q18 in which <a href="https://blog.556ventures.com/2019/01/4q18-at-prepaid-momentum-stunted-but.html" style="color: #954f72;">AT&T seemed to have lost its growth mojo</a>. <o:p></o:p></div>
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Looking at the drop in growth seems somehow disturbing after so many go-go quarters. Is prepaid plateauing, especially since all other prepaid competitors have loss subscribers (Sprint hasn’t reported yet as of this writing)? It may be but there are some silver linings: 1) Some solace for the prepaid group as their 85,000 phone adds beat their postpaid brethren.</div>
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<a href="https://4.bp.blogspot.com/-mWUf2jmCoNU/XMjAiMvVQ5I/AAAAAAAAEVo/2Jo9K7qMiAQ02Mz2IXlyaCKCxj7Sr1G_wCLcBGAs/s1600/Screen%2BShot%2B2019-04-30%2Bat%2B5.10.46%2BPM.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="300" data-original-width="496" height="193" src="https://4.bp.blogspot.com/-mWUf2jmCoNU/XMjAiMvVQ5I/AAAAAAAAEVo/2Jo9K7qMiAQ02Mz2IXlyaCKCxj7Sr1G_wCLcBGAs/s320/Screen%2BShot%2B2019-04-30%2Bat%2B5.10.46%2BPM.jpg" width="320" /></a><span style="font-family: "calibri" , sans-serif; font-size: 12pt;">2) In his prepared remarks, Chairman Stephenson reiterated the company’s strategy to focus on the high-value prepaid segment but divulged (for the first time in my recollection) that Cricket </span><i><span style="font-family: "calibri" , sans-serif; font-size: 11pt;">“</span><span style="background-color: white; font-family: "calibri" , sans-serif; font-size: 11pt;">had its lowest ever quarterly churn rate of less than 3%, down more than 60 basis points year-over-year. Prepaid revenue growth was solid, up more than 6%. We now have more than 10 million Cricket subscribers, double what we had when we acquired the company in 2014 with more than 17 million total prepaid customers under the umbrella of AT&T.”</span></i></div>
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<b><span style="background-color: white; font-size: 11pt;">Why it matters</span></b><span style="background-color: white; font-size: 11pt;">: Chairman Stephenson’s unveiling of prepaid metrics (prepaid churn and ARPU are not publicly available metrics) suggest tremendous stability in the Cricket base. For long-time industry watchers, prepaid churn ranged in the mid 4% to 5%. Therefore, churn less than 3% is a tremendous achievement. Moreover, stating there are over 10 million Cricket subscribers since the 2014 acquisition, out of the over 17 million prepaid base gives context on Cricket’s explosive performance.<o:p></o:p></span></div>
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<span style="background-color: white;"><span style="font-family: "calibri" , sans-serif;"><span style="font-size: 11pt;">Growth and acquiring switchers is an expensive game. For 4Q18 earnings, AT&T cited a competitor’s loss-leading handset promotion which took a toll on its branded prepaid. With its debt paydown targets from the Time-Warner acquisition, the company is </span><span style="font-size: 14.666666984558105px;">unlikely</span><span style="font-size: 11pt;"> to respond to any loss-leading promotion. This has been articulated in both the prepaid and postpaid side. As a result, explosive growth may not be on the horizon in the near term, barring extreme competitive circumstances. </span></span></span><br />
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<span style="background-color: white;"><span style="font-family: "calibri" , sans-serif;"><span style="font-size: 11pt;"><b>Caveat</b>: If </span><span style="font-size: 14.666666984558105px;">postpaid</span><span style="font-size: 11pt;"> distribution will expand under FirstNet, prepaid may ride its coat tails.</span></span></span><span style="font-family: "calibri" , sans-serif; font-size: 11pt;"><o:p></o:p></span></div>
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556 Ventureshttp://www.blogger.com/profile/08323882447629466573noreply@blogger.comtag:blogger.com,1999:blog-1700935316484269836.post-9498383757703753032019-04-29T12:02:00.001-04:002019-05-07T16:00:21.236-04:001Q19 Verizon Prepaid – Sustained Losses but It’s OK?<div dir="ltr" style="text-align: left;" trbidi="on">
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It’s almost like a broken record that the Verizon prepaid group continues to lose subscribers quarter after quarter. In fact, the company has lost subscribers for the last six quarters. In tracking over 17 quarters, 14 have been losses. <o:p></o:p></div>
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Here’s the breakdown for year ending:<o:p></o:p></div>
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2015 – 551,000<o:p></o:p></div>
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2016 – 133,000<o:p></o:p></div>
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2017 – 43,000<o:p></o:p></div>
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2018 – 757,000<o:p></o:p></div>
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These for years total over 1.48 million lost subscribers. Add 1Q19’s 176,000 losses and the tally is over 1.6M. <a href="https://blog.556ventures.com/2019/01/4q18-verizon-prepaid-continues-decline.html" style="color: #954f72;">In late January, following the Verizon earnings call, I noted these continued losses</a> and CFO Ellis then paid lip service to note that they’re going to evolve their offerings over time. For this quarter, CFO Ellis noted that the quarter’s losses were better than 1Q18’s -355,000, seemingly putting a "it's not that bad" spin on things. The party line had always been allowing the shedding of low (profit) and price sensitive customers with the retention of high-value monthly plan subscribers who don’t mind paying premium for the Verizon brand/coverage. That thought is also goes hand in hand with migrating the voice/text phone-only people off or help transition them to smartphone plans.</div>
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<b>Why it still doesn’t matter: </b>Verizon is first and foremost a postpaid company with marketing and retention dollars better served on the postpaid side. Prepaid is highly contested as two players have dominated prepaid over last 3 years years, AT&T (Cricket) and T-Mobile (Metro by T-Mobile). The two have taken the lion’s share of the prepaid net additions and they will continue to do so as their distribution into non-urban areas expand. At the end of 1Q19, Verizon’s retail base was close to crossing 118M. The 4.48M prepaid count is just 3.8% overall. Then there’s the revenue. If Verizon’s prepaid ARPU is in mid-high 30s and its postpaid ARPA in the $130s (no apples-to-apples, I know), one can see why prepaid just isn’t a huge priority. <o:p></o:p></div>
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556 Ventureshttp://www.blogger.com/profile/08323882447629466573noreply@blogger.comtag:blogger.com,1999:blog-1700935316484269836.post-21233138169461249522019-03-25T11:48:00.000-04:002019-05-01T07:29:14.010-04:002019 Prepaid - What Do Trends From Previous Years Say? <div dir="ltr" style="text-align: left;" trbidi="on">
1Q19 Earnings season is about a month away. Postpaid gets much of the focus because it brings in revenues and because it's a big chunk of the bread and butter revenue of many carriers. However, though prepaid is a minor asterisk on many carriers, it doesn't mean that competition isn't just as formidable.<br />
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Trends could be a good predictor of future performance. For every earnings call, I try to display a couple of years worth of net additions or losses on Twitter and occasionally, I write a blog or two. Let's look at the previous years' aggregate results and see if anything is interesting.<br />
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<b>2017 </b><br />
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<a href="https://4.bp.blogspot.com/-sBCiZ90YMeo/XJjT24OS4sI/AAAAAAAAET0/37GrFpjRXgIDP60FSQtsTOyVIRrYBtcOACLcBGAs/s1600/2017%2BPrepaid.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="326" data-original-width="605" height="215" src="https://4.bp.blogspot.com/-sBCiZ90YMeo/XJjT24OS4sI/AAAAAAAAET0/37GrFpjRXgIDP60FSQtsTOyVIRrYBtcOACLcBGAs/s400/2017%2BPrepaid.jpg" width="400" /></a></div>
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It's clear the biggest loser was America Movil (Tracfone) as a huge loss factor was the lifeline brand, Safelink. Tracfone was once a huge prepaid force to be reckoned with and to be fair it still is. At the end of 2017, it had over 23 million customers. <br />
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Verizon didn't have a bad 2017. As the company is over 90 some odd percent postpaid. It didn't seem like a huge impact, as the carrier stated its intent to move feature phone subs off its 3G network and onto higher ARPU bearing smartphone plans.<br />
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Sprint looked like it was recovering and turned the corner from abysmal years '15 and '16 due to Assurance Wireless losses, their lifeline brand. The Sprint prepaid group's flagship Boost Mobile continued to contribute as Virgin Mobile seemingly didn't help the cause.<br />
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Lastly, the T-Mobile and AT&T fight was the most competitive. The real story behind those two companies' momentum is the respective purchases of regional players MetroPCS and Leap Wireless (Cricket). T-Mobile dominated all of '15 and '16 as it expanded its distribution doors beyond the MetroPCS footprint. AT&T used the same playbook in revamping and expanding Cricket's distribution nationally. Within the weeds, 2Q17 was the inflection point in which AT&T led for the remainder of the year. This is important as AT&T and T-Mobile are emerging as the dominant prepaid forces.<br />
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<b>2018</b><br />
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<a href="https://2.bp.blogspot.com/-r7ZOeOsTuf4/XJjYzUPi_iI/AAAAAAAAEUA/rir7vPWmkgk3eZxvXQx4B4czN4pNFiXGACLcBGAs/s1600/2018%2BPrepaid.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="341" data-original-width="611" height="222" src="https://2.bp.blogspot.com/-r7ZOeOsTuf4/XJjYzUPi_iI/AAAAAAAAEUA/rir7vPWmkgk3eZxvXQx4B4czN4pNFiXGACLcBGAs/s400/2018%2BPrepaid.jpg" width="400" /></a></div>
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America Movil continued to lose! Persistent blame was cast on its lifeline brand. Corporately, it appeared an underlying industry strategy was to embrace the higher ARPU bearing and flagship Straight Talk brand for sub growth and revenue. Straight Talk now makes up ~9.1 million out of its overall 21.7 million base. The higher ARPU strategy yielded positives as its overall corporate end of year ARPU hit $26 vs '17's $24 vs '16's $23. In addition, the overall corporate churn trend continues to improve.</div>
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While Verizon '17 prepaid looked encouraging, '18 saw significant prepaid <a href="https://blog.556ventures.com/2019/01/4q18-verizon-prepaid-continues-decline.html" target="_blank">losses</a>. Its sub base is barely 4 million and while there are some who point to the semi-linked Visible brand to address its prepaid ambition, it's a tough and price sensitive market. </div>
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Sprint was supposed to have turned the corner in '17 but you would have been wrong for '18. 1Q18 saw some good momentum but in the end, <a href="https://blog.556ventures.com/2019/01/4q18-sprint-prepaid-tanks.html" target="_blank">4Q18 tanked</a>. Clearly Sprint is more focus on good postpaid numbers, as it even categorized some Boost Mobile users with a good payment record and moving them into the overall postpaid count. <br />
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Again, the AT&T and T-Mobile dynamic proved to show the most interesting outcomes, as the two continue to battle it out for growth. Throughout '18 prepaid adds slowed with T-Mobile claiming that the prepaid-postpaid lines have blurred significantly. There are a combination of factors perhaps, like any competitor, the carrier would rather spend its resources into higher-ARPU bearing postpaid users AND AT&T's Cricket has put the competitive screws on Metro by T-Mobile. The big BUT is in 4Q18 where unexpectedly, T-Mobile came roaring back, besting AT&T. With its positive momentum, AT&T should have dominated <a href="https://blog.556ventures.com/2019/01/4q18-at-prepaid-momentum-stunted-but.html" target="_blank">4Q18</a> but its branded prepaid tanked the numbers. Still, overall in '18 AT&T was the net prepaid winner.<br />
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<b>2019?</b><br />
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With abundant losses behind it, America Movil may cross into positive territory in 2019 as its losses were ~100K in 4Q18. The first quarter trend for each year typically carries over some of the 4Q momentum. If that is true, then American Movil may potentially see '19 as a turnaround year, barring overwhelming competition. The increasing ARPU trend should continue as it's likely the company will add more resources into getting more Straight Talk traction.<br />
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Though Verizon 4Q18 losses only amounted to 90K, nearly 600K of its overall '18 losses happened in 1H18. Seemingly, it could be on the upswing. Yet, the jury is still be out as Verizon doesn't really seem to address its offerings competitiveness to grow or retain its prepaid base.<br />
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Sprint is a big unknown. Through earnings calls, filings and market looks, Boost Mobile seems to be holding its own while Virgin Mobile is a non-contributor. The trend is negative as Sprint, which once was a significant prepaid player is inconsequential as far as marketshare. All the indicators are going in the wrong direction, their churn is up and their prepaid ARPU is declining.<br />
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The growth money still in on AT&T's side as its prepaid momentum is greater than T-Mobile's. If one extracts the 4Q18 glitch, AT&T continues to be the growth leader, barring additional AT&T branded prepaid losses. The bottom line is that both companies would continue to shape 2019 prepaid growth. <br />
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Finally, here's how the prepaid business units shape up versus the overall branded base to note who is shrinking and contracting.<br />
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<a href="https://1.bp.blogspot.com/-iHjUykEVl1Y/XJj2-eVyq2I/AAAAAAAAEUM/MWCLinHY4WACxzPsLVndvG57iojki9JDACLcBGAs/s1600/Screen%2BShot%2B2019-03-25%2Bat%2B11.41.29%2BAM.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="543" data-original-width="518" height="400" src="https://1.bp.blogspot.com/-iHjUykEVl1Y/XJj2-eVyq2I/AAAAAAAAEUM/MWCLinHY4WACxzPsLVndvG57iojki9JDACLcBGAs/s400/Screen%2BShot%2B2019-03-25%2Bat%2B11.41.29%2BAM.jpg" width="381" /></a></div>
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556 Ventureshttp://www.blogger.com/profile/08323882447629466573noreply@blogger.comtag:blogger.com,1999:blog-1700935316484269836.post-14719401219335540672019-02-26T10:59:00.001-05:002019-02-26T10:59:54.270-05:00Sprint's 5G Launch Potentially Gives It the 'Yellow Jersey" <div dir="ltr" style="text-align: left;" trbidi="on">
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At Mobile World Congress, Sprint announced its intention to launch <a href="https://investors.sprint.com/news-and-events/press-releases/press-release-details/2019/Sprint-Announces-Commercial-5G-Service-to-Launch-in-May-Starting-in-Chicago-Atlanta-Dallas-and-Kansas-City/default.aspx" target="_blank">5G in May</a> with initial markets in Chicago, Atlanta, Dallas and Kansas City, along with Houston, LA, NYC. Phoenix and Washington, DC. <br />
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<a href="https://1.bp.blogspot.com/-IlDBlpCZjlQ/XHVSQDYJSxI/AAAAAAAAESE/TCJuk-kQp9YUvllr12J5RFqZ4vkUlFUZACLcBGAs/s1600/1.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="225" data-original-width="400" src="https://1.bp.blogspot.com/-IlDBlpCZjlQ/XHVSQDYJSxI/AAAAAAAAESE/TCJuk-kQp9YUvllr12J5RFqZ4vkUlFUZACLcBGAs/s1600/1.jpeg" /></a></div>
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In support of the 5G foray, the company has lined up vendors to create and make available complementary halo devices LG (V50 ThingQ 5G), Samsung (Galaxy S10 5G) and HTC (5G Hub). </div>
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<b>The big picture</b>: Sprint is finally realizing the advantage of its 2.5 GHz spectrum. While most of rivals were deploying LTE with FDD spectrum, Sprint's 100+ MHz TDD is a blessing as it can use that same wide bandwidth dynamically (split mode) to serve LTE and 5G. Therefore, it can add more downlink where market conditions require in contrast to a defined chunk of bandwidth as in competitors' FDD modes.</div>
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<li>On the technology side, Sprint has been very vocal about investing in Massive MIMO radios and antennas, either when upgrading existing sites or building new ones. This technology is foundational as a 5G enabler and is ramping up in the first 5 months of 2019. </li>
<li>Sprint's LTE Advance should be well over 220M POPs covered. But in late 2018, the company claims 225 gigabit LTE cities. This is important as it can provide a similar customer speed experience along side 5G. </li>
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<b>Why it matters</b>: To take a page out of the Tour de France where the leader wears the 'yellow jersey' as the winner in the stage, the 5G race seems to line up with Sprint. While larger competitors AT&T and Verizon are deploying fatter mmW spectrum for fixed and quasi mobile service, it's unclear how they will get a national 5G footprint (It can bring in its discontinued 3G spectrum). T-Mobile is banking on its FDD 600 MHz to provide the national coverage layer that could win the 5G geographic race down the line but it currently is still deploying and waiting for television station clearing. Moreover, it's unclear how much of its limited spectrum that it shares with LTE can provide a meaningful 5G experience. </div>
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To be sure, Sprint's 2.5 5G coverage cannot provide a fully filled-inn national map. Physics makes it just too expensive to do so. However, using the 2.5 GHz in already built out markets and Massive MIMO upgrades along with the trend of vendor modularity (software and 5G 'cards'), Sprint can provide more 5G POP coverage than competitors in 2019. </div>
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Tour de France observers will note that the race is multi-stage and with each stage there could be different leaders wearing the yellow jersey. For now, in the first stage of the domestic 5G, it's looking like Sprint.</div>
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<b>Extra conten</b>t: John Saw, Sprint CTO at Mobile World Congress 2019 talking about its 5G network plans.</div>
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<iframe allow="accelerometer; autoplay; encrypted-media; gyroscope; picture-in-picture" allowfullscreen="" frameborder="0" height="315" src="https://www.youtube.com/embed/mMEQ82BGYzU" width="560"></iframe></div>
556 Ventureshttp://www.blogger.com/profile/08323882447629466573noreply@blogger.comtag:blogger.com,1999:blog-1700935316484269836.post-62409824442146822212019-02-07T11:50:00.002-05:002019-02-07T11:50:41.500-05:004Q18 T-Mobile Prepaid Recovers A Bit<div dir="ltr" style="text-align: left;" trbidi="on">
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T-Mobile took back net additions leadership for the quarter amid a slowdown in 2017 and 2018 from monstrous growth in 2015 and 2016. With 135K adds, the company beats continued prepaid nemesis <a href="https://blog.556ventures.com/2019/01/4q18-at-prepaid-momentum-stunted-but.html" target="_blank">AT&T which posted 26K but only 13K phone net additions</a>. </div>
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<a href="https://3.bp.blogspot.com/-wUDELTdrydo/XFxTdGegNZI/AAAAAAAAERk/P08io6wh0K0XhIGKRNwKI7YUC63NfaWnQCEwYBhgL/s1600/Screen%2BShot%2B2019-02-07%2Bat%2B8.20.52%2BAM.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="338" data-original-width="750" height="288" src="https://3.bp.blogspot.com/-wUDELTdrydo/XFxTdGegNZI/AAAAAAAAERk/P08io6wh0K0XhIGKRNwKI7YUC63NfaWnQCEwYBhgL/s640/Screen%2BShot%2B2019-02-07%2Bat%2B8.20.52%2BAM.jpg" width="640" /></a></div>
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<b>Why it Matters: </b><br />
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T-Mobile needed to slow the AT&T prepaid momentum a bit as it has been moving towards prepaid leadership in terms of additions since 2Q17. Were it not for AT&T branded prepaid losses, Cricket's 240K net adds would have continued AT&T's domination. A quarterly win is a nice reversal of 2018 fortune.<br />
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<span style="text-align: left;">It's no secret that postpaid has better revenue upside than prepaid and in the 3Q18 earnings call, President Mike Sievert explained that their focus had been converting competitors' prepaid users to T-Mobile postpaid. Data point: Prepaid makes up 33% of its branded base and 30% of the revenue.</span></div>
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<span style="text-align: left;">Despite how the company and others in the industry have been stating that the prepaid/postpaid plan lines have blurred, T-Mobile postpaid hovers at ~$46 while its prepaid ARPU is in the mid $38 range. So Mike's argument holds water. What is unique is that in 4Q, T-Mobile admitted that its gains were from lower churn but also plan and handset promotions. The promotions are a sharp contrast to not responding to 3Q AT&T promotions. Will T-Mobile by Metro continue its promotional run or is the AT&T branded prepaid losses a quarterly anomaly? Though with the 4Q win, AT&T safely won the 2018 leadership. What will '19 look like? </span></div>
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556 Ventureshttp://www.blogger.com/profile/08323882447629466573noreply@blogger.comtag:blogger.com,1999:blog-1700935316484269836.post-33920026421261118262019-01-31T16:52:00.001-05:002019-01-31T16:54:05.014-05:004Q18 Sprint Prepaid Tanks<div dir="ltr" style="text-align: left;" trbidi="on">
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Just when you thought Sprint prepaid turned the loss corner in 2017, it started sputtering in 2Q18 and then totally tanked in 4Q19 with 174K net losses. Sprint bet big on prepaid in the Dan Hesse days and embarked on a multi-brand strategy. Then, Assurance, a lifeline brand created to counter America Movil's Safelink greatly added to the prepaid base. Then with the fallout of lifeline investigations, those numbers quickly went away. Meanwhile in 2017, under then CEO Claure, Sprint announced the re-launch of its limbo brand, Virgin Mobile. The new Virgin Mobile was supposed to be an "industry game-changer" with an iPhone only bent. It hasn't moved the needle in prepaid competition.</div>
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<a href="https://4.bp.blogspot.com/-y_H_8oThN1g/XFMwPypCZSI/AAAAAAAAERA/x3XFL4ZN5mQg7-Kc8Gh3TC9F1ehsUlZcwCLcBGAs/s1600/Screen%2BShot%2B2019-01-31%2Bat%2B8.17.17%2BAM.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="276" data-original-width="495" src="https://4.bp.blogspot.com/-y_H_8oThN1g/XFMwPypCZSI/AAAAAAAAERA/x3XFL4ZN5mQg7-Kc8Gh3TC9F1ehsUlZcwCLcBGAs/s1600/Screen%2BShot%2B2019-01-31%2Bat%2B8.17.17%2BAM.jpg" /></a></div>
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<b>Why it matters:</b> Essentially, Sprint prepaid is a one brand pony - Boost. In the CY4Q18 earnings call and material, Sprint noted that Boost continues to be a strong contender. In the previous quarter, Boost accounted for <200K net additions. For this quarter, rather than provide a definitive number, Sprint CEO Combes only stated that Boost delivered eight consecutive quarters before "migration."</div>
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<b>Migration</b>? What's that? In a nutshell, Sprint has identified high-value and stable Boost or Virgin Mobile subscribers and offer them a non-branded Sprint postpaid plan and device financing. For this quarter they totaled 100K, which also classified them in the Sprint postpaid subscriber base. </div>
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In CY3Q18, Combes managed expectations that this quarter would be negative. <span style="text-align: justify;">One can only assume that Virgin Mobile is the brand that is in a freefall since Sprint no longer reports Lifeline (Assurance) subs due to regulatory constraints. However, Sprint expects a ret</span>urn to growth in CY1Q19/FY4Q18. Even if Sprint prepaid bounces back, it will be a while before it matches the momentum of AT&T Cricket or Metro by T-Mobile. <br />
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556 Ventureshttp://www.blogger.com/profile/08323882447629466573noreply@blogger.comtag:blogger.com,1999:blog-1700935316484269836.post-24052338293797317362019-01-30T17:57:00.000-05:002019-01-31T12:21:26.058-05:004Q18 AT&T Prepaid Momentum Stunted but Cricket is OK<div dir="ltr" style="text-align: left;" trbidi="on">
After a monster run at huge net additions, the prepaid group somehow fell off a cliff. It's not a pretty sight, is it? After its Leap Wireless acquisition, the company completed the acquisition in 1Q14, the company began to ramp up to expand the Cricket brand beyond the legacy region footprint. T-Mobile's MetroPCS had a similar ramp in growth from 1Q15 to 1Q17. By 2Q17, AT&T prepaid started taking the industry prepaid net add leader. Therefore, AT&T 4Q18 prepaid numbers were a jaw dropper. <br />
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<a href="https://2.bp.blogspot.com/-d-B67RBM2Ok/XFIjUV0tb-I/AAAAAAAAEQk/mralqeb8ym4chVNeKyGmlhmFa6TsQIl8wCLcBGAs/s1600/Screen%2BShot%2B2019-01-30%2Bat%2B5.19.19%2BPM.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="256" data-original-width="499" src="https://2.bp.blogspot.com/-d-B67RBM2Ok/XFIjUV0tb-I/AAAAAAAAEQk/mralqeb8ym4chVNeKyGmlhmFa6TsQIl8wCLcBGAs/s1600/Screen%2BShot%2B2019-01-30%2Bat%2B5.19.19%2BPM.jpg" /></a></div>
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<b>What happened: </b>Many industry watchers have become accustomed to Cricket as the net addition driving force. However in the traditional cut-throat holiday selling quarter, promotions abounded. Detailed in the earnings call Q&A, Chairman Randall Stephenson assured analysts that Cricket still had growth momentum with 240K net adds but the branded prepaid side suffered these losses. He pointed to two factors: 1) Branded prepaid subs were moving to competitors' postpaid and 2) AT&T did not want to counter a loss leading handset promotion (A $250 device was offered at $100). As a result the prepaid phone net adds only amounted to 13K. </div>
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<b>Why it Matters</b>: While AT&T has been disciplined about not getting into promotions that hurt margin, it does impact the view that growth and competition is hurting them in the very visible net addition metric. It's likely that the AT&T branded prepaid loss could factor in the gains at T-Mobile, perhaps both pre and postpaid. Unless the competition can sustain a loss leader strategy and Cricket growth stagnates, AT&T 1Q19 prepaid net additions should climb out of that cliff. Stephenson has noted glowingly in the past about Cricket's ARPU (~$35) being close to postpaid. Prepaid has been a bright spot over the last two years of growth and revenue contribution, offsetting the declining and handcuffed postpaid side. With more of the same postpaid performance anticipated in '19, prepaid needs to get its mojo back. </div>
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556 Ventureshttp://www.blogger.com/profile/08323882447629466573noreply@blogger.comtag:blogger.com,1999:blog-1700935316484269836.post-5860757749231377262019-01-29T13:55:00.003-05:002019-01-29T13:55:39.264-05:004Q18 Verizon Prepaid Continues Decline<div dir="ltr" style="text-align: left;" trbidi="on">
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<span style="text-align: left;">Verizon prepaid has steadily lost subscribers over the many quarters. For 4Q18 the carrier lost 90,000 subscribers, 3K more than last quarter. This performance, on the surface, is disturbing for any student of business. In the 3Q18 earnings call, CFO Ellis stated, "..prepaid is certainly a small part of our business. And we will continue to evolve and </span><span style="text-align: left;">adapt</span><span style="text-align: left;"> </span><span style="font-family: Georgia, "Times New Roman", serif; text-align: left;">the product offering there over time." The company was to focus the prepaid offerings on value-added segments. The 4Q18 results suggest it's either not working or still a work in process into 2019.</span></div>
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<b>Why it doesn't matter</b>: Verizon's retail subscriber base is now nearly 118 million subscribers of which the prepaid base is about 4.6 million. That's less than 4% of the overall retail subscribers. Even though the prepaid group had been north of 5 million, the postpaid side is where the money is at. In contrast, the postpaid subscriber net additions exceeded 1.2 million. In the end for prepaid competition, Verizon as a brand, while strong force in postpaid is a non-contender in prepaid. </div>
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556 Ventureshttp://www.blogger.com/profile/08323882447629466573noreply@blogger.comtag:blogger.com,1999:blog-1700935316484269836.post-16320393691361364902019-01-29T11:49:00.001-05:002019-01-29T11:50:02.033-05:00Axios Type Posts Going Forward<div dir="ltr" style="text-align: left;" trbidi="on">
When I spent time at my old company, Current Analysis, the value to the customer base on quick analysis was brevity and competitive impact. We wrote (at the time) very short but meaningful opinions and analyses on events (announcements, plan changes) on the competitive landscape.<br />
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Fast forward to 2019 and a news website has taken brevity to the extreme with similar goals but less words. I'll try this format from now on....</div>
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FTW</div>
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556 Ventureshttp://www.blogger.com/profile/08323882447629466573noreply@blogger.comtag:blogger.com,1999:blog-1700935316484269836.post-63063210794158088312018-09-24T14:03:00.003-04:002018-09-24T14:03:50.989-04:00MetroPCS to Metro by T-Mobile & Plan Changes<div dir="ltr" style="text-align: left;" trbidi="on">
<a href="https://www.businesswire.com/news/home/20180924005407/en/" target="_blank">T-Mobile is rebranding</a> its MetroPCS prepaid business unit with the new moniker Metro by T-Mobile. Honestly, it's time or should have been done maybe two years after the MetroPCS was acquired at the end of 2012 and closed in early 2013. The PCS part of the brand harkens back to the PCS spectrum the company was operating. Quite frankly, the industry shortcut nomenclature was always Metro, so BFT.<br />
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How we got here: T-Mobile CEO John Legere teased a series of Twitter posts last Friday, the 21st.<br />
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With T-Mobile and Legere promoting a "LegereForBatman" campaign, you'd think maybe another T-Mobile executive could have been the Riddler as a stretch joke. </div>
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But long-time industry observers may have noted the Legere tweet's question marks were the MetroPCS colors. Even T-Mobile CFO (also ex-MetroPCS CFO) Braxton Carter weighed in on John's tweet:</div>
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<a href="https://3.bp.blogspot.com/-ROxM6Hbwn6Y/W6jaN1p0f1I/AAAAAAAAD2k/4ifhbZDrfJUfN-8RKDUWm-UfnkefptJFACLcBGAs/s1600/bc%253F%253F.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="339" data-original-width="609" height="222" src="https://3.bp.blogspot.com/-ROxM6Hbwn6Y/W6jaN1p0f1I/AAAAAAAAD2k/4ifhbZDrfJUfN-8RKDUWm-UfnkefptJFACLcBGAs/s400/bc%253F%253F.png" width="400" /></a></div>
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<b>Plan Changes</b></div>
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Aside from the Metro rebrand, the other announcement component is the revised plans. The new $50 and $60 plans are more competitive not just for the additional hotspot data ($50 from 0 -> 5GB and $60 from 10 -> 15GB) but it's notable that marquee external partner value has been to the prepaid segment. The inclusion of Google One storage and Amazon Prime membership in a plan is something out of a postpaid plan playbook.</div>
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But that's the point that T-Mobile is making; the lines between postpaid and prepaid are getting blurred. However, that's not entirely true. The fine print says that Metro subscribers will get throttled when there is congestion so that T-Mobile One (postpaid) users have data priority. Still, the new plans validate a long standing effort to boost the prepaid average revenue per user by focusing higher plan price points. Moreover, another trend is to promote family lines. The value proposition here, similar to postpaid, is that family plans decrease churn. Churn is especially critical in the prepaid sector, where the price sensitive customer has a tendency to jump providers for the best deal. So the introduction of Google One and Amazon Prime membership are more anti-churn value components to sweeten the pot and to move the conversation away from the traditional lowest monthly cost mindset. <br />
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Step back and look at the macro view. After blistering growth since integration, T-Mobile prepaid (predominantly MetroPCS) has cooled since 2Q17. While Metro has slowed, arch rival AT&T's Cricket side has greater growth momentum than Metro. <br />
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Meanwhile, Sprint's and American Movil's Tracfone prepaid units continue to recover from staggering losses due to its earlier bets on the lifeline segment (Assurance and SafeLink). In the near term, it's looking like a two carrier race. We'll see what happens in 4Q if these plans can make an impact. The yea's not done yet; competitors may also get into the value race as holiday sales take shape.<br />
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556 Ventureshttp://www.blogger.com/profile/08323882447629466573noreply@blogger.comtag:blogger.com,1999:blog-1700935316484269836.post-87827802047455537992018-09-06T06:54:00.003-04:002018-09-24T10:39:01.182-04:00The Pros and Cons of Verizon's Ronan Dunne to Becoming BT's CEO<div dir="ltr" style="text-align: left;" trbidi="on">
Ronan Dunne, the current CEO of Verizon Wireless popped up on the news led by an article in the UK's <a href="https://www.telegraph.co.uk/business/2018/09/02/former-boss-o2-running-bts-top-job/" target="_blank">Telegraph</a> business pages this past Saturday, Sept 2. The gist of the speculation is that he was in the UK in the previous week supposedly interviewing for the BT CEO job. His background seems right as he had been an O2 (BT's wireless carrier competitor) since 2001 with stints as CFO in 2005 and ultimately the CEO from 2008 to 2016.<br />
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In 2016, he joined Verizon and how he got here to the States was a subject of an thorough <a href="https://www.independent.ie/business/interview-chief-storyteller-ronan-dunne-gears-up-to-write-a-new-chapter-at-verizon-35057381.html" target="_blank">Independent</a> piece. Much has been speculated that he was looking for a new position after Hans Vestburg got the Verizon CEO nod. I noted that he could have been a candidate for the the Lowell McAdam vacancy i<a href="https://blog.556ventures.com/2018/06/the-logic-of-hans-vestburgs-ceo.html" target="_blank">n an earlier June blogpost</a> but there were stronger candidates. </div>
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Here are some quick pros and cons for Dunne to take the BT CEO helm:<br />
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<li><span style="font-family: "times new roman" , serif; font-size: 12pt;">As a European and as a long time area telecom hand, he already has the knowledge base for the continent and appreciates the complexities and quirks of each country.</span></li>
<li><span style="font-family: "times new roman" , serif; font-size: 12pt;">Dunne had a successful track record at O2 but in the year plus, he's gained the experience of running a far larger wireless operation with different challenges and buyer demographics (i.e. predominantly postpaid). Under his watch, unlimited plans returned to the service portfolio and eliminated the stigma that Verizon was the sole non-unlimited plan provider.</span></li>
<li><span style="font-family: "times new roman" , serif; font-size: 12pt;">Since American 5G planning and deployment has exceeded that of European counterparts, Dunne's competitive advantage will be the insight of getting ready for 5G fixed and mobile services. </span></li>
<li><span style="font-family: "times new roman" , serif; font-size: 12pt;">If BT takes Dunne on, he's be an experienced European CEO but with a fresh and valuable external perspective.</span></li>
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<ul style="text-align: left;">
<li><span style="font-family: "times new roman" , serif; font-size: 12pt;">BT is more than a wireless company and Dunne doesn't have any direct landline operations experience. While many telecom companies such as AT&T, Verizon and BT have integrated as 'one' company, the businesses are a bit different. If it's like the American landline experience, he'd have to figure out a way to slow or reverse subscriber losses. </span></li>
<li><span style="font-family: "times new roman" , serif; font-size: 12pt;">According to the Telegraph article, Patterson, the ex-BT CEO was bogged down in regulatory fights. Although Dunne knows the European regulatory scene, he has also battled with them. His last regulatory fight ended with the denial of the Hutchinson of O2. </span></li>
<li><span style="font-family: "times new roman" , serif; font-size: 12pt;">Dunne's contract at Verizon may be the wild card. Does it allow him to get out of his duties and with what penalties or forfeitures of substantial bonuses. Is there a non-compete that will limit him? Will the Verizon Board and Vestburg make a play to retain him?</span></li>
</ul>
<span style="font-family: "times new roman" , serif;">On paper, Dunne as an experienced executive is fit to lead BT and like many job opportunities, it may be fit, chemistry and upside in the decision making process. I guess we'll see soon what happens as BT needs to fill the vacancy quickly.</span><br />
<br />
<br />
<br />
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556 Ventureshttp://www.blogger.com/profile/08323882447629466573noreply@blogger.comtag:blogger.com,1999:blog-1700935316484269836.post-65104377217050782772018-06-26T00:43:00.005-04:002018-06-28T18:28:17.103-04:00WatchTV - Building the Base to Enable Future Revenue Growth<div dir="ltr" style="text-align: left;" trbidi="on">
Is it still price competitive as in the old days? Yes and no. The price leaders continue to be Sprint and T-Mobile while AT&T and Verizon continue to position themselves as the premium carriers. Of course the big two's legacy network perception continues to play an integral role both in high-value customer retention and seemingly record low churn. Despite T-Mobile's continuous poaching, the sky hasn't fully fallen at AT&T and Verizon. <br />
<br />
Make no mistake, T-Mobile was "the" catalyst that stimulated postpaid price wars and brought unlimited back at the big two. Network and price continues to drive service provider selection but with over 120% wireless penetration, the game for several years has been one of switching. Number 3 and 4 players, T-Mobile and Sprint have been marketing their networks to be equivalent to that of the bigger two. Combined with price advantage, T-Mobile has seen greater success in building up its subscriber base. However, the days of widespread price slashing at T-Mobile has stabilized. While Sprint continues its price value leadership to acquire new customers and offset churn, the three other providers are moving to maintain or increase profitability. <br />
<br />
Now the shift is moving to embedded value, beyond pricing. At T-Mobile, higher data thresholds on data prioritization, hotspot capability, texting and data abroad, T-Mobile Tuesdays and free Netflix are just examples for retention and acquisition. To offset content, Sprint cut a deal with Hulu while AT&T rolled in HBO as a benefit of subscribing. Verizon content play is Go90 but it's not a subscriber benefit as Go90 is an open to all. However, AT&T's strategic vision is one that centers around content and the ability to deliver and monetize that. AT&T's acquisition of DirecTV produced the over the top (OTT) DirecTV Now. Now with quickly closing the Time-Warner acquisition, <a href="http://about.att.com/newsroom/watchtv_app_with_unlimited_wireless.html" target="_blank">AT&T announced two new postpaid rate plans that bundle content value, anchored by WatchTV</a>.<br />
<br />
<div style="text-align: left;">
WatchTV is a 'skinny bundle' that features well known video channel brands. Customers on the new Unlimited &More and Unlimited &More Premium receive the base channels. Premium users will be able to add <span style="background-color: white; color: #333333;"><span style="font-family: inherit;">HBO, Cinemax, SHOWTIME or STARZ as well as music streaming services like Amazon Music Unlimited and Pandora Premium. For non-AT&T customers, the price is $15.</span></span></div>
<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://3.bp.blogspot.com/-iV57U702vnc/Wy6RTpA9M8I/AAAAAAAADnU/lDpnR8Um9WI0EB9_f-AWp4BXrKZhI31MgCLcBGAs/s1600/Channel%2BLineup-6-20-2018.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1600" data-original-width="1318" height="640" src="https://3.bp.blogspot.com/-iV57U702vnc/Wy6RTpA9M8I/AAAAAAAADnU/lDpnR8Um9WI0EB9_f-AWp4BXrKZhI31MgCLcBGAs/s640/Channel%2BLineup-6-20-2018.jpg" width="524" /></a></div>
<br />
When DirecTV Now launched, many knocked the limited content available but as the progressed, more channels were added; it's likely to follow a similar playbook to further WatchTV's value proposition. WatchTV is based on the same DirecTV Now platform which may borrow key features including a similar navigation guide, multi-platform access and cloud DVR. This immediately conjures up the cannibalization issue of current DirecTV franchise of users. To offset this, a $15 credit is available to upsell or tamp down any video churn.<br />
<b><br /></b>
<b>The Rate Plan Comparison</b><br />
<b><br /></b>Surprisingly, a new portfolio <a href="https://blog.556ventures.com/2018/03/heres-how-at-enhanced-unlimited-plans.html" target="_blank">swap comes in just over three months since the last price change</a>. Inevitably the conversation moves to price. This introduction is supposed to be on the week of June 24th yet as of this writing, the new plans have yet to be launched. With some preliminary details on the new Unlimited &More and Unlimited &More Premium plans, they seek relative parity with the previous Unlimited Choice and Unlimited Plus Enhanced. What has been shared so far is that Choice and &More is the same at 4 lines ($160) but $5 more with lines 1 to 4.<br />
<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://4.bp.blogspot.com/-ndUDCWPLMvQ/WzLlmOSOeUI/AAAAAAAADn0/JGPGIE4XPPMUnW_AzUaYWdC-cI5EEnL1gCLcBGAs/s1600/watch.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="574" data-original-width="793" height="460" src="https://4.bp.blogspot.com/-ndUDCWPLMvQ/WzLlmOSOeUI/AAAAAAAADn0/JGPGIE4XPPMUnW_AzUaYWdC-cI5EEnL1gCLcBGAs/s640/watch.png" width="640" /></a></div>
<br />
For Unlimited &More Premium, the pricing remains with Plus Enhanced with lines 1-4 ($190) but $5 more for lines 5+. To me, it's clear that AT&T covets the 4 line account as the 'bread and butter' profile of its users. Still, there has been no price cuts so T-Mobile and Sprint remain the price leaders while Verizon remains the most expensive, especially withe introduction of the third <a href="https://www.fiercewireless.com/wireless/verizon-set-to-roll-out-new-unlimited-plan" target="_blank">aboveunlimited</a> tier. With some price increases, AT&T's challenge is to convert older unlimited and Unlimited Choice & Plus Enhanced account holders to these new plans with the feature value.<br />
<br />
<b>Looking Ahead</b><br />
<b><br /></b>
In the near term, WatchTV is about enhancing competitive postpaid plan value. It comes at the end of the second quarter and ready for steady promotion going into holiday selling. In the long term, the goal is to increase the video viewer base. To help this, AT&T promises that WatchTV is but the beginning of many new offers to come as the result of the Time Warner acquisition. Given the rapid pace of WatchTV rollout, there should be many of those promise offers should come by the end of the year. <br />
<br />
As AT&T has publicly stated, its long term strategy is to leverage its advertising and analytics business unit to drive future revenue. A larger subscriber base certainly helps the cause but that advertising and analytics unit is making its own moves to create the necessary foundation to expand its ad tech expertise. The <a href="http://about.att.com/story/att_to_acquire_appnexus.html" target="_blank">AppNexus</a> acquisition valued at <a href="http://fortune.com/video/2018/06/25/att-buys-appnexus-for-about-1-6-billion/" target="_blank">$1.6B </a>is expected to close in the third quarter brings further global capability, something I believe wants to further expand its international portfolio. CEO Randall Stephenson promised more smaller acquisitions to come after the Time-Warner close. With the impressive pace of announcements and execution, it'll be interesting where the now media company will bolster its business units. My money is on further content and ad tech.</div>
556 Ventureshttp://www.blogger.com/profile/08323882447629466573noreply@blogger.comtag:blogger.com,1999:blog-1700935316484269836.post-4662202518821067422018-06-19T15:44:00.000-04:002018-06-19T15:44:03.134-04:00AT&T's Re-SHAPING<div dir="ltr" style="text-align: left;" trbidi="on">
As a long time industry analyst and wireless segment observer, I've witness short term/tactical carrier moves in price plans to increase competitiveness, the network technology generations positioning and rollouts and corporate strategic turns. Experiencing this June's AT&T Shape conference in Hollywood validated to me, the ongoing reinvention of a telecom company into a global media company. Of course, that was all set in motion with the 2014 DirecTV acquisition and now with the $85B Time Warner buyout, it's full speed ahead. That has been the big media journey so far. How the company lines up to this important goal is found in internal and external complementary changes. One such change is the creation of the Shape conference.<br />
<div>
<br />
Rewind back to the time when smartphone adoption was ramping up. Device app development was exploding. The internal AT&T investment to spur innovation through external collaboration created the <a href="http://about.att.com/innovation/foundry" target="_blank">Foundry</a> concept. AT&T's Palo Alto Foundry launched in 2011 to bring in Silicon Valley minds to work on cool ideas, at the time, app development was the low hanging fruit. In conjunction, the AT&T Developer Summit had already started in early 2010. Always a couple of days ahead of the Consumer Electronics Show opening, the Dev Summit sought to capitalize on the tech CES attendee base. The four day conference designed with speakers, a hackathon, prizes and parties spurred networking among AT&T, partners and developers. As an aside, 2014 was maybe the most infamous due to the party crashing by T-Mobile CEO, John Legere.<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://4.bp.blogspot.com/-nOxHdTShZm4/WylHR1_BfrI/AAAAAAAADl8/0zBdqdUjj-QwAwaAgbAN0FNnrHqKV4iCACLcBGAs/s1600/attdev.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="440" data-original-width="660" height="132" src="https://4.bp.blogspot.com/-nOxHdTShZm4/WylHR1_BfrI/AAAAAAAADl8/0zBdqdUjj-QwAwaAgbAN0FNnrHqKV4iCACLcBGAs/s200/attdev.jpg" width="200" /></a><a href="https://3.bp.blogspot.com/-ww298W4zmdc/WylHWOZwF8I/AAAAAAAADmA/XUdDuTf9_Fw4pgAES5DhXt_et5VX0vAgQCLcBGAs/s1600/att-dev-summit-470x310%25402x.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="400" data-original-width="606" height="209" src="https://3.bp.blogspot.com/-ww298W4zmdc/WylHWOZwF8I/AAAAAAAADmA/XUdDuTf9_Fw4pgAES5DhXt_et5VX0vAgQCLcBGAs/s320/att-dev-summit-470x310%25402x.jpg" width="320" /></a></div>
<br />
<br />
Fast forward to the increasing importance of content, mainly video and the influence of DirecTV and more importantly, DirecTV Now (launched in Fall 2016) as content delivery platforms. </div>
<div>
<br /></div>
<div>
With a 6 year run, AT&T ended the Dev Summit. It was time to move into the media and content community. AT&T Shape 2017 (billed as a tech and entertainment expo) conference at Warner Brothers studios nods to AT&T's strategic imperatives of content and its ecosystem. Yet the AT&T network, as in the Dev Summit, was a backbone topic. Though a hackathon with cash prizes was still an event, spotlight shifted to the <a href="https://shape.att.com/film-awards" target="_blank">AT&T Film Awards</a>. With multiple winning categories, including a grand prize of $20,000 in the Best Short: Emerging Filmmakers category, filmmakers were now in the driver's seat. Nevermind that the filmmakers spend much more than the grand prize to create their film, Shape provides a platform to catch the eyes of Hollywood execs, and (now) WarnerMedia, the AT&T content business unit. <br />
<a href="https://2.bp.blogspot.com/-vveVMX7TpXk/WylP7-jsc0I/AAAAAAAADmg/Q-zrjgcLq4YnrdcrK60KYeK_OOIV_qZNACLcBGAs/s1600/b977ab98c51bd27227f449edcffbef19.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="204" data-original-width="306" height="133" src="https://2.bp.blogspot.com/-vveVMX7TpXk/WylP7-jsc0I/AAAAAAAADmg/Q-zrjgcLq4YnrdcrK60KYeK_OOIV_qZNACLcBGAs/s200/b977ab98c51bd27227f449edcffbef19.png" width="200" /></a><a href="https://2.bp.blogspot.com/-FZdBWSnUME4/WylTyH6iQZI/AAAAAAAADms/1GTEOL3-5rwcy0s_GzMcjGtlvwsZnfYlQCLcBGAs/s1600/att_shape_2018_02033_-_publicity_-_h_2018.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="523" data-original-width="928" height="179" src="https://2.bp.blogspot.com/-FZdBWSnUME4/WylTyH6iQZI/AAAAAAAADms/1GTEOL3-5rwcy0s_GzMcjGtlvwsZnfYlQCLcBGAs/s320/att_shape_2018_02033_-_publicity_-_h_2018.jpg" width="320" /></a>At this year's Shape, AT&T Mobility & Entertainment President, David Christopher 'called an audible' (impromptu) and declared all three finalists, winners (each winning $20k) in the Best Short: Emerging Filmmakers segment, to the audience's approval. It was a nice move, one that filmmakers in the audience will remember as AT&T largesse.<br />
<br />
While <a href="https://shape.att.com/" target="_blank">tech and content speaker sessions </a>packed interested audiences, the tech demos in the a Warner Brothers town square pushed a lot of 5G technology education and virtual and augmented reality companies. While some of the demos were stretching one's imagination, it's the trajectory towards these VR/AR areas combined with 5G that is undeniable as future growth areas. <br />
<br />
Content is king. That has been punctuated with the <a href="http://about.att.com/story/court_rules.html" target="_blank">rapid close of Time -Warner</a> into WarnerMedia. The next step in AT&T's strategy is to further monetize this content beyond the standard distribution and licensing agreements. The four main business units under the AT&T corporate umbrella are Communications, WarnerMedia, International and Advertising & Analytics. AT&T Chairman Stephenson has already spoken bullishly of the smart monetization potential of its burgeoning ad business, especially when the company has owner's economics on content. Stephenson has also stated that there will be smaller ad/adtech acquisitions coming. For Shape 2019, I am betting that this business unit will be more prominent, showing content creators and owners on how they may monetize their assets further. </div>
<div style="text-align: left;">
<span style="background-color: white; color: #222222;"><span style="font-family: inherit;"><br /></span></span></div>
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556 Ventureshttp://www.blogger.com/profile/08323882447629466573noreply@blogger.com