The US smartphone market was off to a slow start in 2022, falling 6% YoY due to various factors. But postpaid momentum is expected to push growth in Q2 2022. Below is a quick recap of Q1 2022 from the perspective of carriers, MVNOs and retail channels, as well as some early views on April and Q2 expectations.

AT&T wins postpaid subscribers as T-Mobile growth slows. Verizon and US Cellular posts net-add losses

• AT&T saw 691,000 postpaid net adds, its best Q1 in a decade. The operator’s consistent promotional offers for both new and old subscribers helped it win share from other carriers.
• T-Mobile saw 589,000 net postpaid phone adds, a 23% YoY decrease, due to less aggressive switcher offerings and a higher focus on strengthening Sprint customer relationships.
• Verizon saw 36,000 net postpaid phone losses. Consumer postpaid phone net losses were 292,000, partially offset by strong business net additions of 256,000. Verizon lost postpaid subscribers, especially to AT&T.
• US Cellular had 44,000 net postpaid phone losses, citing increased competition in the market.

Prepaid sales were weak despite tax-season promos

• There was strong prepaid-to-postpaid migration, affecting prepaid sales. Q1 2021 also had stimulus money that fueled the economy, which was absent this year, also impacting sales of prepaid devices.
• Cricket net phone adds were down 45%, T-Mobile saw a 59% YoY decrease but remained net positive.
• On the other hand, Verizon lost 77,000 TracFone subscribers and a further 3,000 Verizon Prepaid subscribers, US Cellular had 18,000 net losses while Dish saw another 343,000 net losses which it attributed to CDMA shutdown effects.

Cable players continue growing, taking subscribers from postpaid carriers

• Comcast, Charter, and Altice combined had over 8.4 million subscribers in Q1 2022. While Comcast had the biggest subscriber share at 52%, Charter followed closely behind with 47%.
• Comcast saw over 39% YoY subscriber growth, Charter 47% and Altice grew 14%. Comcast’s Xfinity set a new net-add record for the company while Charter’s Spectrum Mobile revenues reached $690 million, an increase of 40.2% YoY. Altice net adds were 12,000 in Q1 2022. It aims to strengthen its retail positioning by opening 75 more retail locations this year.

National retail sales soft

• Sales in channels such as Best-Buy, Walmart and Target were weak as inventory was impacted post-holiday sales and some stores limited hours due to Omicron spikes in January. Prepaid demand in these channels remained soft, affecting most of the sales volumes.

April smartphone sales see growth, Q2 inflationary impact less than expected

• Overall smartphone sales rebounded in April and are expected to rise mid-single digits in Q2 from the slump in Q1, heavily driven by strong postpaid momentum. The promotions environment has improved — Verizon began offering the iPhone 13 for free to existing customers with a trade-in instead of just switchers, for example.
• AT&T and Verizon both are increasing service or administrative charges for their postpaid plans due to inflationary pressures. Nevertheless, we don’t expect this to have a significant effect on consumer behavior in postpaid. It may cause some people to switch to different plans, but we don’t see postpaid-to-prepaid migration happening.
• Prepaid will remain soft, however, even as supply chain issues lessen. This is where inflation may cause more headwinds, especially since smartphone costs have gone up by 10% for some OEMs.
• Carriers may begin decreasing their portfolios in Q2, which would affect white-label and low- to mid-end devices. Fewer SKUs give carriers more bargaining power on volume deals.