A review of key financial and operating metrics for the five largest wireless operators in the US: AT&T, Sprint, T-Mobile, Tracfone and Verizon Wireless. An analysis of some of the slides is available on FierceWireless at: http://www.fiercewireless.com/special-reports/how-verizon-att-sprint-t-mobile-and-tracfone-stacked-q3

1. US wireless market
trends for Q3 2014
Jan Dawson
Chief Analyst
(408) 744-6244
jan@jackdawresearch.com
@jandawson

2. Introduction
• I’m making this slide deck available as a public service
• The data behind the deck are available in Excel as a paid product from Jackdaw Research,
both on a one-off and annual subscription basis
• Similar decks for the two previous quarters may be found at:
• http://www.slideshare.net/JanDawson2/us-wireless-market-trends-q1-2014
• http://www.slideshare.net/JanDawson2/us-wireless-market-trends-q2-2014
• The slide deck will be available exclusively on FierceWireless.com until Monday November
10th, 2014, and thereafter will be available on slideshare.net and for embedding elsewhere
• A brief analysis of some of the slides is also available exclusively on FierceWireless.com at
http://www.fiercewireless.com/special-reports/how-verizon-att-sprint-t-mobile-and-tracfone-stacked-
q3
2

3. Contents
• Financials - revenues, profitability, capital intensity
• Subscribers - total subs, net adds, churn
• Device trends - subsidies, penetration
3

4. Wireless revenues
AT&T Sprint T-Mobile Tracfone Verizon
Q1 2012Q2 2012Q3 2012Q4 2012Q1 2013Q2 2013Q3 2013Q4 2013Q1 2014Q2 2014Q3 2014
4
30,000
20,000
10,000
0
Source: Company reporting, Jackdaw Research analysis

5. Revenue growth
Year on year wireless revenue growth
AT&T Sprint T-Mobile Tracfone Verizon
Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014
5
40%
30%
20%
10%
0%
-10%
Source: Company reporting, Jackdaw Research analysis

6. EBITDA margins
AT&T Sprint T-Mobile Tracfone Verizon
Note: TMO results in Q2 2014 adjusted to strip
out the effects of a spectrum sale worth $731m
6
50%
40%
30%
20%
10%
Source: Company reporting, Jackdaw Research analysis
Wireless EBITDA margins
0%
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014

7. Operating margins
Wireless operating margins
AT&T Sprint T-Mobile Tracfone Verizon
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014
7
40%
30%
20%
10%
0%
-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

8. Capital intensity
AT&T Sprint T-Mobile Verizon
Note: Sprint changed the basis on which it reports wireless capital expenditures this quarter, and we are
awaiting clarification on the new reporting standard. Sprint is therefore excluded from this chart this quarter.
8
30%
20%
10%
Source: Company reporting, Jackdaw Research analysis
Wireless capital intensity
0%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014

9. Total subscribers
AT&T Sprint T-Mobile Tracfone Verizon (retail only)
9
120,000
90,000
60,000
30,000
Source: Company reporting, Jackdaw Research analysis
Total subscribers
0
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014

10. Subscriber breakdown
Total subscriber breakdown, Q3 2014
120,000
100,000
80,000
60,000
40,000
20,000
0
Postpaid Prepaid
Connected Wholesale
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
AT&T Sprint T-Mobile Tracfone Verizon
10
Source: Company reporting, Jackdaw Research analysis

11. Total net adds
AT&T Sprint T-Mobile Tracfone Verizon
11
3,000
2,000
1,000
0
Source: Company reporting, Jackdaw Research analysis
Wireless net adds
-1,000
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014

12. Net add breakdown
Net add breakdown for Q3 2014
3,000
2,500
2,000
1,500
1,000
500
0
-500
-1,000
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 subscriber totals
Postpaid Prepaid Connected Wholesale
AT&T Sprint platform T-Mobile Tracfone Verizon
12
Source: Company reporting, Jackdaw Research analysis

13. Net adds by device
Postpaid net adds by device type
Postpaid phone net adds Postpaid tablet net adds
AT&T Sprint T-Mobile Verizon Wireless
13
1,500
1,000
500
0
-500
-1,000
Source: Company reporting, Jackdaw Research analysis

14. Postpaid phone net adds
Postpaid phone net adds
AT&T Sprint T-Mobile Verizon
Q4 2013 Q1 2014 Q2 2014 Q3 2014
14
1,500
1,250
1,000
750
500
250
0
-250
-500
-750
Source: Company reporting, Jackdaw Research analysis

15. Postpaid tablet net adds
Postpaid tablet net adds
AT&T Sprint T-Mobile Verizon
Q4 2013 Q1 2014 Q2 2014 Q3 2014
15
1,200
900
600
300
0
Source: Company reporting, Jackdaw Research analysis

16. Total net adds for big 5
Postpaid Prepaid Wholesale Connected devices
Total Phones Tablets
Q4 2013 Q1 2014 Q2 2014 Q3 2014
16
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
-1,000
-2,000
Source: Company reporting, Jackdaw Research analysis

17. Total subs for big 5
Postpaid Prepaid Connected devices Total
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014
17
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
Source: Company reporting, Jackdaw Research analysis

18. Total subs for big 5
Postpaid Prepaid Connected devices
18
Source: Company reporting, Jackdaw Research analysis
9%
22%
69%
Note: excludes wholesale to
avoid double-counting. Figures
for end of Q3 2014

19. Churn – postpaid
AT&T Sprint T-Mobile Verizon
19
3%
2%
1%
Source: Company reporting, Jackdaw Research analysis
Postpaid churn
0%
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014

20. Churn – prepaid
Sprint T-Mobile Tracfone
20
6%
4%
2%
Source: Company reporting, Jackdaw Research analysis
Prepaid churn
0%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014

21. Losses implied by churn
Estimated postpaid subscriber losses, based on postpaid churn, 000s
AT&T Sprint T-Mobile Verizon
Q2 2012 Q4 2012 Q2 2013 Q4 2013 Q2 2014
21
4,000
3,000
2,000
1,000
0
Source: Company reporting, Jackdaw Research analysis

22. Gross adds
Estimated postpaid gross adds, based on churn and net adds, 000s
AT&T Sprint T-Mobile Verizon
Q2 2012 Q4 2012 Q2 2013 Q4 2013 Q2 2014
22
5,000
4,000
3,000
2,000
1,000
0
Source: Company reporting, Jackdaw Research analysis

23. Gross adds vs losses
AT&T gained vs. lost subscribers – postpaid, estimated
Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014
23
3,500
3,000
2,500
2,000
1,500
1,000
500
0
Source: Company reporting, Jackdaw Research analysis
Lost Gained

24. Gross adds vs losses
Sprint gained vs. lost subscribers – postpaid, estimated
Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014
24
3,000
2,000
1,000
0
Source: Company reporting, Jackdaw Research analysis
Lost Gained

25. Gross adds vs losses
T-Mobile gained vs. lost subscribers – postpaid, estimated
Lost Gained
Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014
25
2,500
2,000
1,500
1,000
500
0
Source: Company reporting, Jackdaw Research analysis

26. Gross adds vs losses
Verizon Wireless gained vs. lost subscribers – postpaid, estimated
Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014
26
5,000
4,000
3,000
2,000
1,000
0
Source: Company reporting, Jackdaw Research analysis
Lost Gained

27. Gross adds vs losses
Tracfone gained vs. lost subscribers – prepaid, estimated
Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014
27
5,000
4,000
3,000
2,000
1,000
0
Source: Company reporting, Jackdaw Research analysis
Lost Gained

28. ARPU – postpaid
ARPU
$70
$65
$60
$55
$50
$45
AT&T (postpaid phone-only ARPU) Sprint
T-Mobile Verizon (ARPA/connections per account)
T-Mobile ABPU AT&T phone-only plus Next billings
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014
Verizon doesn’t report ARPU so we use a calculation which is roughly but not entirely equivalent. For both T-Mobile
and AT&T we have included a second metric which includes equipment installment payments.
28
Source: Company reporting, Jackdaw Research analysis

29. ARPU - prepaid
Sprint T-Mobile Tracfone
29
$40
$30
$20
$10
Source: Company reporting, Jackdaw Research analysis
ARPU – prepaid
$0
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014

30. Smartphone sales
% of postpaid sales that were smartphones
AT&T Sprint T-Mobile Verizon
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014
30
100%
90%
80%
70%
60%
Source: Company reporting, Jackdaw Research analysis

31. Smartphone sales
Number of smartphones sold (m)
AT&T Sprint T-Mobile Verizon
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014
31
9
6
3
0
Source: Company reporting, Jackdaw Research analysis
Note: AT&T and T-Mobile sold exactly the same
number of smartphones in both Q2 and Q3
2014. Hence, their lines and datapoints overlap.
We have been unable as yet to ascertain how
many smartphones Sprint sold in the quarter.

32. Smartphone penetration
% of postpaid base on smartphones
AT&T Sprint T-Mobile Verizon
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014
32
90%
60%
30%
0%
Source: Company reporting, Jackdaw Research analysis

33. Smartphone upgrades
12%
9%
6%
3%
0%
AT&T Sprint T-Mobile Verizon
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 no longer reports this metric.
Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014
33
Source: Company reporting, Jackdaw Research analysis

34. Equipment revenue
AT&T Sprint T-Mobile Tracfone Verizon
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014
34
3,000
2,250
1,500
750
0
Source: Company reporting, Jackdaw Research analysis

35. Subsidies – Sprint data
Percent of hardware cost covered by revenue Wireless subsidy
35
60%
50%
40%
30%
20%
10%
Source: Company reporting, Jackdaw Research analysis
2,000
1,500
1,000
500
0
0%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014

36. Subsidies – T-Mobile data
Value & Simple Choice as % of postpaid base
Equipment sales revenues financed on EIP
Equipment sales revenue % on EIP
36
90%
60%
30%
Source: Company reporting, Jackdaw Research analysis
1,500
1,000
500
0
0%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014

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