In a typical TMT first round, the scoring sheet is not testing whether you remember the letters T, M, and T. It is testing whether you treat ARPU and churn as one system, and whether you notice when content or spectrum spend is step-fixed rather than proportional to volume. Candidates who open a SaaS net-retention tree, or a generic volume-times-price profitability tree, usually lose the room in the first two minutes.
This piece stays on telecom and media: wireless, broadband, streaming, ads-backed video, and spectrum. Platform SaaS and product packaging belong in a technology case. After you finish, you should be able to open a TMT prompt the way an interviewer wants, run a rate-hike or tier-mix calculation without annualizing churn incorrectly, and say clearly when an extra subscriber forces new capex or a new rights check.
What the interviewer is actually grading
TMT practices at strategy firms and at Big Four Strategy & Operations shops hire for the same habit: connect the P&L to the physical or contractual constraint. On wireless that constraint is often spectrum, towers, and cell load. On media it is rights minimums, content amortization schedules, and ad inventory that does not fill evenly across the day.
I score structure on whether you separate five decisions early:
- Price versus churn on the existing base (the back book), not only on new adds.
- Mix: prepaid versus postpaid, SVOD versus AVOD versus linear, ad load versus completion.
- Step costs: a mid-band layer, a sports package, a minimum guarantee.
- Regulation and licenses: spectrum is an asset with a balance-sheet cost, not a free input.
- Overlap in bundles: one household can already take both products.
If you skip the first item and jump to "growth initiatives," the interviewer hears that you have never sat with a telco or streamer CFO.
Calibrate with real unit economics
Interview cases invent companies. Real filings tell you what "normal" looks like so your invented numbers do not sound absurd.
As of year-end 2024, Verizon's Consumer segment reported wireless retail postpaid ARPA of $138.25 for the full year and postpaid churn of 1.12% in the fourth quarter (phone churn 0.89%). Prepaid lives on a different planet: prepaid ARPU near $31 and monthly churn above 4%. When an exhibit mixes postpaid and prepaid into one "ARPU," ask for the split before you recommend a hike.
On streaming, Netflix's 2024 results show content amortization of about $15.3 billion against roughly 302 million paid memberships at year-end. That is not a per-hour variable cost that shrinks when a quiet subscriber watches less. Disney's FY2024 earnings materials put combined DTC streaming revenue at about $24.9 billion and Disney+ average monthly revenue per paid subscriber near $7.70 in the fiscal fourth quarter; wholesale distributor deals can pull reported ARPU down even when the retail sticker looks healthy.
Spectrum is the telco version of a content library: a large, lumpy purchase that only pays when utilization rises. The FCC's Auction 107 (C-band) closed with about $81.1 billion in net bids. Earlier, Auction 97 (AWS-3) raised about $41.3 billion in net bids, per the NTIA AWS-3 transition summary. In a case, "we have unused MHz" is not free revenue; empty rural spectrum and congested urban spectrum are different problems.
| Metric | Rough public benchmark (as of late 2024 / early 2025 filings) | Case implication |
|---|---|---|
| Postpaid wireless churn | ~1.0–1.5% monthly on large U.S. postpaid books | A 40–50 bp rise is a big deal, not a rounding error |
| Prepaid wireless churn | Often 3–5%+ monthly | Do not apply postpaid LTV math to prepaid |
| Streaming content | Amortization in the tens of billions for global SVOD | Extra hours watched rarely cut the rights check |
| Mid-band spectrum | Auction proceeds in the tens of billions | Capacity cases are capex cases, not ARPU cases |
The ARPU-churn coupling
Ned's rule. Never recommend a price move until you have written both the ARPU gain and the churn loss on the same cohort. If you cannot show the math for the back book, you do not have a recommendation.
Lifetime value for a stable monthly contribution is approximately contribution divided by monthly churn. Raise price by $3 and contribution rises; if churn rises enough, lifetime contribution falls even though the monthly bill looks better. Interviewers listen for that sentence. They also listen for whether the hike hits only new customers or the installed base. Telcos and streamers both hide that distinction in the fine print of the prompt.
Annualizing casually is how people lose easy points. Approximate annual survival is (1 − monthly churn)^12, not 1 − 12 × monthly churn. At 1.2% monthly churn, twelve times the rate is 14.4%, but compounded survival is closer to 86.5% (about 13.5% annual attrition). Use the compounding form when the case asks for year-one retained base.
Step costs: content and spectrum
A generic profitability tree assumes cost scales smoothly with volume. TMT often does not.
Content amortization and sports rights behave like step-fixed costs: you pay for the slate whether the marginal subscriber watches. Subscriber acquisition spend (device subsidies, marketing, affiliate fees) can be closer to variable, but it is not interchangeable with content. Mixing "CAC" from a consumer-internet frame with "content amortization" from a 10-K is a category error.
On the network side, coverage and capacity are different investments. Adding subscribers in an empty rural sector may be contribution-positive at current ARPU. Adding the same subscribers on a congested mid-band cell can force another layer of radios, small cells, or spectrum. That is when the interviewer expects you to ask for load or utilization, not another ARPU chart.
Exhibits that trip strong candidates
| Exhibit | What the sheet rewards | Common miss |
|---|---|---|
| ARPU and churn by cohort | Segment the cheap-plan mix | Blended ARPU hides the mix shift |
| Content cost / sports rights | Treat as contracted and lumpy | Assume cost falls with hours watched |
| Ad load vs completion | Ads ARPU can raise SVOD churn | Add ads ARPU to sub ARPU without a churn haircut |
| Capex and utilization | Coverage vs capacity | Treat unused MHz as unused revenue |
| Bundle overlap | Net incremental households | Count 1+1 subscribers as 2 |
Ads businesses sell impressions and reach. A streaming membership that never watches still carries content cost if rights are minimum guarantees. Mbps, GB, and MHz are engineering units; you do not need RF fluency, but you must not multiply MHz as if it were revenue.
Worked mini-case: Clearlane's $4 hike
Prompt (invented). Clearlane Wireless is a regional U.S. postpaid operator with 5.0 million phone connections. Service ARPU is $46 per month. Cash cost to serve is $14 per connection per month (network share, care, billing). Monthly churn is 1.40%. Product wants a $4 across-the-board rate hike on the entire back book. Case materials say churn on hiked lines rises to 1.85%. No change in acquisition volume for the next twelve months. Should Clearlane hike?
Step 1 — contribution and simple lifetime value.
| Scenario | Monthly contribution | Monthly churn | Approx. lifetime months (1 / churn) | Lifetime contribution |
|---|---|---|---|---|
| Status quo | $46 − $14 = $32 | 1.40% | ~71.4 | $32 × 71.4 ≈ $2,285 |
| After $4 hike | $50 − $14 = $36 | 1.85% | ~54.1 | $36 × 54.1 ≈ $1,948 |
Lifetime contribution falls by about $337 per connection, or roughly 15%. The monthly bill looks healthier; the customer is worth less.
Step 2 — year-one retained base (same starting book).
Approximate year-end survivors with compounded monthly retention:
- Status quo: 5.0m × (1 − 0.014)^12 ≈ 5.0m × 0.844 ≈ 4.22m
- After hike: 5.0m × (1 − 0.0185)^12 ≈ 5.0m × 0.799 ≈ 4.00m
Step 3 — year-one service contribution (ignore seasonality).
Use average connections ≈ (start + end) / 2, times twelve months, times monthly contribution:
- Status quo: ((5.0 + 4.22) / 2) × 12 × $32 ≈ 4.61m × 12 × $32 ≈ $1.77b
- After hike: ((5.0 + 4.00) / 2) × 12 × $36 ≈ 4.50m × 12 × $36 ≈ $1.94b
Year-one cash contribution rises about $170m even though lifetime value per sub falls. That is the trap interviewers set on purpose.
Recommendation. Do not take the across-the-board hike as a permanent policy. Year-one optics improve while you destroy about $337 of lifetime contribution per retained connection and shrink the year-end base by roughly 220k lines. Prefer: (a) hike only new acquisitions and rate-ineligible promotional cohorts, (b) a smaller $1–$2 move with a holdout, or (c) a paid add-on (device protection, streaming bundle) that raises ARPU without rewriting the base rate card. Next exhibit I would ask for: churn by tenure and by metro congestion. If the 220k lost lines were capacity-constrained urban phones, you may also avoid a capex layer; if they were high-ARPU rural accounts with spare spectrum, the long-run damage is worse than the year-one math shows.
The point of the exercise is not the recommendation slogan. It is showing both horizons on one page before you pick a side.
Bundles and ads without double-counting
When mobile and streaming share a household, incremental subscribers are not additive. Ask for overlap. When AVOD is offered, add ads ARPU only after you haircut for fill rate and for any churn the ad load creates. Disney and peers increasingly sell ad-supported tiers and wholesale distributor seats; reported ARPU is then a mix metric, not a sticker price. Treat it as such.
Practice this on a live case
Open a scored case on CoachNed and force yourself to write ARPU, churn, and the step cost on the first page of notes before any brainstorming. The five-minute typed warm-up at /start is enough for one rep without an account. For a full voice debrief with seven scores, use /interview. Media and telco-style prompts also sit in /consulting-cases; pair them with the /drills/math set if your compounding of churn is shaky. Everything is open for seven days, no card; then $120 for a recruiting season or $49 a month.
Frequently asked questions
What does TMT mean in a consulting case interview?
In interview usage, TMT usually means telecom, media, and technology-as-distribution (wireless, broadband, streaming, digital advertising). It is not a synonym for B2B SaaS packaging. If the prompt is seats, NRR, and product tiers for enterprise software, you are in a technology case, not a TMT case.
How do you calculate subscriber lifetime value in a telco case?
For a stable monthly contribution and roughly constant churn, a working approximation is monthly contribution divided by monthly churn (or contribution times 1 / monthly churn). Always state the assumption. If contribution or churn will change after a price move, recompute both sides; do not hold churn fixed while you raise ARPU.
Are spectrum costs variable with subscribers?
Usually not in the short run. Spectrum licenses are large, infrequent purchases (see FCC auction proceeds). In a case, treat new mid-band or capacity spend as step capex triggered by congestion, not as a smooth cost per new sub, unless the exhibit explicitly gives a per-connection network cost.
How is content amortization different from CAC?
Content amortization is the P&L recognition of produced and licensed programming over time; it often stays high even if a quiet subscriber watches little. Subscriber acquisition cost is what you spend to win the account (marketing, subsidies, commissions). Interviewers punish candidates who use "CAC payback" language when the binding constraint is a sports rights minimum.
Should I use the same framework for prepaid and postpaid wireless?
No. Prepaid ARPU is lower and monthly churn is typically several times postpaid churn on large U.S. books. Segment the base before you recommend a price change or a bundle.
Sources
- Verizon Q4 2024 earnings exhibit (SEC) — Consumer postpaid ARPA, prepaid ARPU, and churn rates used as calibration. Checked 2026-09-24.
- Netflix Form 10-K for the year ended December 31, 2024 — Paid memberships and content amortization context for streaming step costs. Checked 2026-09-24.
- FCC Auction 107 (3.7 GHz / C-band) — Official net and gross bid totals for mid-band spectrum. Checked 2026-09-24.
- NTIA AWS-3 transition overview — Auction 97 net bids of about $41.3 billion. Checked 2026-09-24.
- Disney FY2024 Q4 earnings exhibit (SEC) — Combined DTC streaming revenue and ARPU methodology notes. Checked 2026-09-24.
CoachNed is independent and unaffiliated with McKinsey, BCG, Bain, Deloitte, or any firm named for interview-style practice.