{"id":154061,"date":"2025-03-24T17:15:29","date_gmt":"2025-03-24T17:15:29","guid":{"rendered":"https:\/\/peraltafinancing.com\/5g-technology\/the-sunday-brief-q1-wireless-competitive-dynamics\/"},"modified":"2025-03-24T17:15:29","modified_gmt":"2025-03-24T17:15:29","slug":"the-sunday-brief-q1-wireless-competitive-dynamics","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=154061","title":{"rendered":"The Sunday Brief: Q1 wireless competitive dynamics"},"content":{"rendered":"


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March greetings from Iowa and Missouri.\u00a0 This week\u2019s picture is a throwback to what we were all doing five years ago.\u00a0 Humans and dogs looked for any opportunity to get out, and both received plenty of steps in 2020 and 2021.\u00a0 Fortunately, there were no social distancing limitations between pets.\u00a0<\/p>\n

This week, after a full market commentary, we take a look at each wireless carrier\u2019s competitive vulnerabilities.\u00a0 There appears to be more to the story beyond recent comments of \u201cone-time\u201d Holiday promotion holdovers.\u00a0<\/p>\n

One final note \u2013 you\u2019ll be able to\u00a0hear<\/i>\u00a0a bit of\u00a0The Sunday Brief<\/u>\u00a0in April on Roger Entner\u2019s weekly podcast (likely right around the Easter holiday).\u00a0 For those of you not familiar with\u00a0The Week With Roger<\/i>\u00a0podcast (Spotify link\u00a0here<\/a>; Apple link\u00a0here<\/a>), it\u2019s a short-yet-sweet synopsis of key events in the telecom industry with occasional guests.\u00a0 It\u2019s on our listening list and we hope you\u2019ll consider adding it to yours.<\/p>\n

The fortnight that was<\/h2>\n

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Both the Fab Five and the Telco Top Five finished in positive territory for the week.\u00a0 Two of the Fab Five (Apple and Microsoft) gained, while the remainder were largely flat.\u00a0 The Telco Top Five had four of five members gain this week with T-Mobile (already up $40 billion or 16% year-to-date) unchanged.\u00a0 So far in 2025, there has been a $1.3 trillion shift in relative market capitalization between the Fab Five and the Telco Top Five.\u00a0 Likely this will reverse as we go through the year, but currently the gap favors telecom over technology mega caps.\u00a0<\/p>\n

In the last\u00a0Brief<\/u>\u00a0we discussed the issues Apple is having with their AI development.\u00a0 On Friday, Bloomberg\u2019s Mark Gurman\u00a0reported<\/a>\u00a0that Siri development leadership was going to shift from John Giannandrea to Mike Rockwell.\u00a0 More importantly, Mike will report to Craig Federighi, SVP of software engineering for Apple.\u00a0 Having Mike report to Craig should help with Siri\u2019s integration into all Apple software.\u00a0<\/p>\n

It\u2019s a big move, and Apple is behind.\u00a0 The article linked above also mentions several other executives who have been transferred from other Apple divisions to help with product management and software development.\u00a0 Their annual development conference (WWDC) is less than 60 days away and Apple is losing mindshare to Open AI, Anthropic, Grok and others.\u00a0 It\u2019s time for Apple to get back on track.<\/p>\n

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Thought M&A was dead?\u00a0 Google announced their largest acquisition in their history this week with a $32 billion all-cash offer for Wiz (here<\/a>).\u00a0 Per Google\u2019s blog post (here<\/a>), here\u2019s what Wiz does (management team pictured):\u00a0\u00a0\u00a0<\/p>\n

\u201cWiz is different from the services we offer today \u2013 it delivers a seamless cloud security platform that connects to all major clouds and code environments to help prevent incidents from happening in the first place.\u00a0 Wiz\u2019s solution rapidly scans the customer\u2019s environment, constructing a comprehensive graph of code, cloud resources, services, and applications \u2013 along with the connections between them. It identifies potential attack paths, prioritizes the most critical risks based on their impact, and empowers enterprise developers to secure applications before deployment. It also helps security teams collaborate with developers to remediate risks in code or detect and block ongoing attacks.\u201d<\/p>\n

Last year (May 2024), Wiz raised $1 billion at a $12 billion valuation.\u00a0 This funding round was co-led by Andreessen Horowitz, Lightspeed Venture Partners, and Thrive Capital.\u00a0 The company was working towards an IPO but decided on Google instead (smart move).\u00a0 The leadership team at Wiz previously led Microsoft Azure\u2019s Cloud Security Group.\u00a0<\/p>\n

High margin, customer-focused, multi-cloud, terrific team.\u00a0 Given that Google has very few of these cross-platform, multi-cloud cybersecurity capabilities today, it\u2019s likely that the purchase gets approved quickly (As we mentioned in the\u00a0Interim Brief<\/a>\u00a0last week, incoming FTC Chair Andrew Ferguson\u2019s\u00a0interview with CNBC<\/a>\u00a0earlier this month lays out his blueprint for approval of any merger.\u00a0 This one seems like it should get a speedy look and likely get approved).\u00a0 Restarting M&A activity after multiple years of stagnation is taking longer than may expected, but the ball is now rolling.\u00a0<\/p>\n

Speaking of sales, T-Mobile\u00a0announced<\/a>\u00a0that they have found a buyer for their (legacy Nextel) 800 MHz spectrum.\u00a0\u00a0Per<\/u>\u00a0this announcement, Grain Capital will pay an undisclosed sum and will work closely with Kansas City-headquartered engineering firm Black & Veatch to \u201cmarket the 800 MHz spectrum portfolio to utilities, other critical infrastructure industry operators, rural and regional operators, and other enterprises, meeting crucial unfulfilled telecommunications needs.\u201d This spectrum has already been completely re-banded (re<\/u>: Sprint\u2019s significant expenses nearly 20 years ago totaled north of $3 billion \u2013 more\u00a0here<\/a>), and our understanding is that it could be immediately used for a private application.\u00a0 Could a network management and operations agreement with\u00a0Southern Linc<\/a>\u00a0follow?\u00a0 We can only hope.\u00a0<\/p>\n

Per<\/u>\u00a0the announcement, T-Mobile also receives additional B and E block 600 MHz spectrum that can be put to immediate use.\u00a0 More details on where Grain\u2019s NewLevel, LLC, holding has 600 MHz spectrum can be found on the Spectrum Omega website\u00a0here<\/a>.\u00a0 A detailed analysis of this transaction and recent spectrum swaps from LYA can be found\u00a0here<\/a>.\u00a0\u00a0<\/p>\n

On a final note, in the wake of Zayo\u2019s acquisition of Crown Castle\u2019s fiber assets (great analysis\u00a0here<\/a>), it was\u00a0announced<\/a>\u00a0that Sunit Patel was transitioning from his Board position to become the CFO of Crown Castle.\u00a0 Sunit is a long-time friend of the\u00a0Brief<\/u>, and we wish him the best in his new position.\u00a0 It also will return him to the hometown of his alma mater, Rice University (go Owls!).\u00a0\u00a0<\/p>\n

There has been a lot of discussion concerning Verizon\u2019s announcement at a recent (March 11) investor conference that the quarter would not meet postpaid expectations (see our LinkedIn post on the topic\u00a0here<\/a>).\u00a0 Verizon\u2019s stock took a 10% hit from the news, and there was concern about a wide-scale price war in the industry.<\/p>\n

So far no such war has ensued, and, as we prognosticated in the above link, the extension of Holiday marketing promotions had more to do with oversupply of the iPhone 16 than anything else.\u00a0 However, we are not entirely sure that the event is a one-timer.<\/p>\n

Here are some additional comments made by Verizon\u2019s Consumer Group Chief Revenue Officer, Frank Boulben, at the Deutsche Bank conference (transcript\u00a0here<\/a>):<\/p>\n

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  1. Verizon is beginning to experience their first three-year device anniversaries.\u00a0 Needless to say, this generates an incrementally larger pool of potential switchers than existed in 2023 or 2024 (Frank referred to this as a \u201csignificant\u201d increase).<\/li>\n
  2. Most customers coming out of their device payments are not upgrading instantly but choosing instead to keep their devices for an additional 5-10 months past the last device payment.\u00a0 This represents a vulnerable window for the company (and an opportunity for AT&T and T-Mobile to present attractive offers to Verizon\u2019s base).<\/li>\n
  3. Verizon expects postpaid net additions of around 8.5 million across the industry in 2025, down slightly from 9 million in 2024.\u00a0 About 6.8 million of these will be in consumer, and slightly less than 4 million of these will be due to prepaid-to-postpaid migrations (which could, in Verizon\u2019s case, come from Total Wireless or another Tracfone brand).<\/li>\n
  4. Port ratios for cable MVNOs flattened in the fourth quarter (for Verizon).<\/li>\n
  5. Immigration impacts prepaid net additions far more than postpaid because of identification and credit check requirements.<\/li>\n
  6. (lack of) Battery life is the primary factor driving Verizon\u2019s device upgrades.<\/li>\n
  7. More than half of the Verizon consumer postpaid retail base is already on the myPlan platform.\u00a0 Selling more perks to these customers (Verizon is targeting a doubling of the perks sold in 2025) is critical to revenue growth per account (and profitability).<\/li>\n<\/ol>\n

    Without a breakthrough device, Verizon is highly dependent on advancements in their myPlan perks.\u00a0 Here is the current lineup (note \u2013 premium plans already include the travel pass option shown below):<\/p>\n

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    These are very compelling digital life perks with some more applicable to the Android or Apple platforms than others.\u00a0 But is this enough for a doubling of perks growth?<\/p>\n

    For example, with Walmart+ membership no longer an option, is it time for an (ad-free) Amazon Prime offering?\u00a0 How about something with Spofity for those who do not want to switch to YouTube Music? Why not an \u201cultimate\u201d package bundling YouTube TV and YouTube Premium for families?\u00a0 Or a perk that puts the power of the Xbox in customer hands (more on the current options available\u00a0here<\/a>)?<\/p>\n

    Verizon has set stringent limitations ($10 adders only, tight exclusivity parameters, etc.) on the myPerks program which was probably great for a controlled launch, but it\u2019s time for expansion to include video and other products that materially improve the digital life.<\/p>\n

    We see Verizon\u2019s dependence on perks as a risk while T-Mobile is deemphasizing perks in their marketing message (vs network quality).\u00a0 AT&T has no content offers with their product, and has experienced great success bundling fiber and wireless.<\/p>\n

    Speaking of T-Mobile, they had more churn vulnerability in 2023 and 2024 because they stuck with 24-month device payment plans (vs. 36 months for their two largest competitors).\u00a0 Even with this competitive gap, T-Mobile managed to lower their churn (more on page five in the 4Q Fact Book available\u00a0here<\/a>).\u00a0 Unlike AT&T and Verizon, T-Mobile will not grow its year-over-year pool of switchers due to contract expiration.<\/p>\n

    Like Verizon, however, T-Mobile needs to rethink their plan structure.\u00a0 Here\u2019s an example of the myriad of plan types T-Mobile offers on their website today:<\/p>\n