This deck summarizes major trends among the five largest US wireless operators – AT&T, Sprint, T-Mobile, Tracfone, and Verizon Wireless – in Q2 2015. This deck is normally part of a paid service from Jackdaw Research – the Quarterly Decks Service. For more information, see: https://jackdawresearch.com/quarterly-company-decks/ If you have any questions, please contact Jan Dawson, Chief Analyst, Jackdaw Research. Contact details are in the deck.

1. Jan Dawson
Chief Analyst
(408) 744-6244
jan@jackdawresearch.com
@jandawson
US wireless market
trends for Q2 2015

2. Introduction
• This analysis mostly focuses on five players: AT&T, Sprint, T-Mobile,
Tracfone, and Verizon Wireless
• These are the four largest operators in the US wireless market, four of
them network operators and Tracfone a mobile virtual network
operator (MVNO), running on the other companies’ networks
• US Cellular is the only other wireless operator with several million
subscribers, but there are many other smaller operators with less than a
million subs
• As such, this analysis captures much of the total market, but not all of it.
However, these players dominate, and are likely to take an ever-
increasing share of the total market going forward
2

3. Note
• This deck represents the bottom tier of Jackdaw
Research’s analysis of the US wireless market
• We also provide the underlying data behind these
charts to clients who subscribe to a higher tier
• The highest tier includes custom presentations on
market trends in addition to the data
• If you are interested in these options, please contact
Jan Dawson at jan@jackdawresearch.com
3

4. Definitions 1
• Postpaid: the majority of retail subscribers today are
described as postpaid, i.e. they pay a monthly bill
based on a plan and overages. Postpaid subscribers
traditionally signed two-year contracts, though this is
starting to change
• Prepaid: around a quarter of retail phone subscribers,
who add credit to their accounts before it is used.
Prepaid plans increasingly resemble postpaid plans in
certain ways, including monthly billing
4

5. Definitions 2
• ARPU: average revenue per user. The average
monthly amount paid by a subscriber for services
rendered. In the past, the major subscriber
revenue metric, but increasingly being replaced
by:
• ABPU: average billings per user. Whereas ARPU
only includes service revenues, ABPU also includes
payments for equipment installment plans, and so
is a better reflection of total spend by customers
5

6. Definitions 3
• Churn: the average percentage of subscribers who left
the carrier each month during the quarter
• Net adds: the net difference in the subscriber base from
one quarter to the next, being the difference between
the new subscribers added and those lost to churn
• Gross adds: the gross number of new subscribers (i.e.
before those lost to churn is subtracted). Can be
calculated roughly from churn and net add numbers
but is generally not directly reported
6

7. Contents
• Financials - revenues, profitability, capital intensity
• Subscribers - total subs, net adds, churn
• Device trends - subsidies, penetration
7

8. Wireless revenues, $m
8
Source: Company reporting, Jackdaw Research analysis
1. Financials
0
10,000
20,000
30,000
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
AT&T Sprint T-Mobile Tracfone Verizon

9. Revenue growth, year on year
9
Source: Company reporting, Jackdaw Research analysis
1. Financials
-10%
0%
10%
20%
30%
40%
Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015
AT&T Sprint T-Mobile Tracfone Verizon

10. 0%
10%
20%
30%
40%
50%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
AT&T Sprint T-Mobile Tracfone Verizon
Wireless EBITDA margins
10
Source: Company reporting, Jackdaw Research analysis
Note: TMO results in Q2 2014 adjusted to strip out the
effects of a spectrum sale worth $731m. Sprint in Q4
2014 adjusted to remove impact of impairments
1. Financials

11. Wireless operating margins
11
Source: Company reporting, Jackdaw Research analysis
Note: TMO results in Q2 2014 adjusted to strip out the
effects of a spectrum sale worth $731m. Sprint in Q4
2014 adjusted to remove impact of impairments
1. Financials
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
AT&T Sprint T-Mobile Tracfone Verizon

12. Wireless Capital intensity
12
Source: Company reporting, Jackdaw Research analysis
1. Financials
0%
10%
20%
30%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
AT&T Sprint T-Mobile Verizon
Sprint hasn’t reported wireless capex for Q2 2015 yet, and
appears to have switched to reporting cash capex only

13. Total subscribers, 000s
13
Source: Company reporting, Jackdaw Research analysis
2. Subscribers
0
25,000
50,000
75,000
100,000
125,000
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
AT&T Sprint T-Mobile Tracfone Verizon (retail only)

14. 0
25,000
50,000
75,000
100,000
125,000
AT&T Sprint T-Mobile Tracfone Verizon
Postpaid Prepaid
Connected Wholesale
Subscriber breakdown, 000s
14
Source: Company reporting, Jackdaw Research analysis
Note: Verizon doesn’t report wholesale or connected
devices (M2M) subscribers. In addition, since Sprint
reports its connected devices subscribers as part of its
retail postpaid and wholesale subscribers, but also
reports these separately, we have broken them out and
subtracted them from the postpaid and wholesale
subscriber totals to avoid double-counting
2. Subscribers

15. Total net adds, 000s
15
Source: Company reporting, Jackdaw Research analysis
2. Subscribers
-1,000
0
1,000
2,000
3,000
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
AT&T Sprint (platform) T-Mobile Tracfone Verizon

16. -1,000
0
1,000
2,000
3,000
AT&T Sprint platform T-Mobile Tracfone Verizon
Postpaid Prepaid Connected Wholesale
Net add breakdown, 000s
16
Source: Company reporting, Jackdaw Research analysis
Note: since Sprint reports its connected devices subscribers as part of its
retail postpaid and wholesale subscribers, but also reports these
separately, we have broken them out and subtracted them from the
postpaid and wholesale net add totals, In addition, Verizon doesn’t report
connected or wholesale subscribers or net adds so these are missing.
2. Subscribers

17. Postpaid net adds by device,
000s
17
Source: Company reporting, Jackdaw Research analysis
2. Subscribers
-500
0
500
1,000
1,500
AT&T Sprint T-Mobile Verizon Wireless
Postpaid phone net adds Postpaid tablet net adds

18. Postpaid phone net adds, 000s
18
Source: Company reporting, Jackdaw Research analysis
2. Subscribers
-750
-500
-250
0
250
500
750
1,000
1,250
1,500
Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015
AT&T Sprint T-Mobile Verizon

19. Postpaid tablet net adds, 000s
19
Source: Company reporting, Jackdaw Research analysis
2. Subscribers
0
500
1,000
1,500
Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015
AT&T Sprint T-Mobile Verizon

20. Total net adds for big 5, 000s
20
Source: Company reporting, Jackdaw Research analysis
2. Subscribers
-2,000
0
2,000
4,000
6,000
8,000
Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015
Postpaid Prepaid Wholesale Connected
Total Phones Tablets

21. Total subs for big 5
21
Source: Company reporting, Jackdaw Research analysis
2. Subscribers
0
100,000
200,000
300,000
400,000
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
Postpaid Prepaid Connected Total

22. Total subs for big 5
22
Source: Company reporting, Jackdaw Research analysis
Note: excludes wholesale to
avoid double-counting. Figures
for end of Q2 2015
2. Subscribers
10%
21%
69%
Postpaid Prepaid Connected

23. Market makeup
23
Note: all numbers and percentages estimated. Totals only represent the five major operators
Source: Company reporting, Jackdaw Research analysis
2. Subscribers
10%
4%
6%
8%
9%
13%
50%
Total postpaid smartphones
Total prepaid smartphones
Total postpaid feature phones
Total prepaid feature phones
Total postpaid tablets
Total other mobile broadband etc
Total connected devices (excl. Verizon)

24. Churn – postpaid
24
Source: Company reporting, Jackdaw Research analysis
2. Subscribers
0%
1%
2%
3%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
AT&T Sprint T-Mobile Verizon

25. Churn – prepaid
25
Source: Company reporting, Jackdaw Research analysis
2. Subscribers
0%
2%
4%
6%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
Sprint T-Mobile Tracfone

26. Losses implied by postpaid
churn, 000s
26
Source: Company reporting, Jackdaw Research analysis
2. Subscribers
0
1,000
2,000
3,000
4,000
Q2 2012 Q4 2012 Q2 2013 Q4 2013 Q2 2014 Q4 2014 Q2 2015
AT&T Sprint T-Mobile Verizon

27. Estimated postpaid gross adds,
000s
27
Source: Company reporting, Jackdaw Research analysis
2. Subscribers
0
1,000
2,000
3,000
4,000
5,000
6,000
Q2 2012 Q4 2012 Q2 2013 Q4 2013 Q2 2014 Q4 2014 Q2 2015
AT&T Sprint T-Mobile Verizon

28. $45
$50
$55
$60
$65
$70
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
AT&T (phone-only)
Sprint
T-Mobile
Verizon (ARPA/CPA)
ARPU – postpaid
28
Source: Company reporting, Jackdaw Research analysis
Verizon’s ARPU is estimated from its ARPA (per account) figure, while
others are as reported. These numbers do not include equipment
installment payments, whereas the ABPU figure on the next slide does
2. Subscribers

29. ABPU – postpaid
29
Source: Company reporting, Jackdaw Research analysis
2. Subscribers
50
55
60
65
70
Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015
AT&T Sprint T-Mobile Verizon

30. ARPU - prepaid
30
Source: Company reporting, Jackdaw Research analysis
2. Subscribers
$0
$10
$20
$30
$40
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
Sprint T-Mobile Tracfone

31. Smartphone sales as % of
postpaid phone sales
31
Source: Company reporting, Jackdaw Research analysis
3. Device metrics
60%
70%
80%
90%
100%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
AT&T Sprint T-Mobile Verizon

32. 0
3
6
9
12
15
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
AT&T Sprint T-Mobile Verizon
Number of smartphones sold,
m
32
Source: Company reporting, Jackdaw Research analysis
Note: for AT&T and Verizon, these numbers
represent postpaid phone sales only. For
Sprint and T-Mobile, they include prepaid
phone sales. Sprint has unfortunately stopped
reporting this metric.
3. Device metrics

33. % of postpaid phone base on
smartphones
33
Source: Company reporting, Jackdaw Research analysis
3. Device metrics
0%
30%
60%
90%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
AT&T Sprint T-Mobile Verizon

34. 0%
2%
4%
6%
8%
10%
12%
Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
AT&T Sprint T-Mobile Verizon
% of postpaid phone base
upgrading in quarter
34
Source: Company reporting, Jackdaw Research analysis
Note: Sprint and T-Mobile had identical numbers in Q4 2013 and Q1 2014. Hence, the
lines representing them in the chart overlap each other during those two quarters.
AT&T didn’t report this metric for several quarters but did again in Q4 2014.
3. Device metrics

35. Equipment revenue, $m
35
Source: Company reporting, Jackdaw Research analysis
3. Device metrics
0
1,000
2,000
3,000
4,000
5,000
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
AT&T Sprint T-Mobile Tracfone Verizon

36. Installment billings, $m
36
3. Device metrics
0
200
400
600
800
1,000
1,200
1,400
1,600
Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015
AT&T (actuals and estimates)
Sprint (includes Lease plans)
T-Mobile
Verizon (actuals and estimates)

37. 0%
10%
20%
30%
40%
50%
60%
70%
Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015
AT&T Sprint Verizon
% of postpaid sales off subsidy
system
37
Note: T-Mobile no longer reports this metric, but had
passed 80% in Q1 2014, when it last reported.
3. Device metrics

38. % of postpaid base off subsidy
model
38
3. Device metrics
0%
20%
40%
60%
80%
100%
Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015
AT&T Sprint T-Mobile Verizon

39. Jan Dawson
Chief Analyst
(408) 744-6244
jan@jackdawresearch.com
@jandawson
Thank you