The wireless industry is expected to take its customary third-quarter breather this year. The nation’s six largest operators are forecast to post relatively strong customer growth results that might not hit the nearly 3.9 million subscribers added last year, but remain healthy enough to keep the year on pace to match some of the strongest growth years of the past.
“Similar to [the first half of 2004] we believe the majority of the U.S. wireless carriers are poised for another strong quarter,” said UBS Warburg. “Specifically, we expect subscriber adds for the industry will remain strong. However, we do expect churn to tick up sequentially from second-quarter levels primarily due to seasonality.”
The industry has already posted more than 8 million net customer additions for the first half of the year, and analysts expect similar results during the final two quarters of 2004.
Verizon Wireless again is expected to post industry-leading customer growth with estimates of between 1.4 million and 1.5 million net subscriber additions for the nation’s largest carrier during the third quarter. Verizon Wireless already signed up nearly 3 million subscribers during the first half of this year and is on its way to inflating its customer base to more than 43 million customers by the end of the year.
T-Mobile USA Inc. is forecast to be the only carrier within sight of Verizon Wireless’ growth, with analysts predicting between 900,000 and 950,000 net additions for the nation’s fifth-largest wireless operator. T-Mobile USA, which recently garnered a number of consumer quality service awards, has attracted more than 2.2 million subscribers this year and is on pace to add more than 4 million total customers this year.
Analysts have noted both Verizon Wireless and T-Mobile USA greatly benefited from the implementation of wireless local number portability last November. Customers are flocking to Verizon Wireless as the perceived network quality leader and to T-Mobile USA as the perceived value leader. The two carriers combined for more than 60 percent of net customer additions posted during the first half of the year by the nation’s six largest carriers and are expected to continue that domination through the foreseeable future.
Cingular Wireless L.L.C., Sprint PCS and Nextel Communications Inc. are expected to vie for the best-of-the-rest honors. Analysts are predicting each carrier to add between 400,000 and 550,000 subscribers during the third quarter.
Nextel, which lost its place as the country’s fifth-largest carrier to T-Mobile USA late last year, is forecast to add approximately 500,000 customers during the third quarter, which would fall short of the 646,000 subscribers the carrier added last year. Nextel is on pace to meet its previous guidance of 1.9 million net adds for the year, which would be just below the 2.2 million subscribers the carrier signed up in 2003.
Cingular, which is in the process of acquiring beleaguered operator AT&T Wireless Services Inc., is expected to report about 450,000 net customer additions during the quarter. RBC Capital Markets lowered its growth expectations for Cingular last month from nearly 600,000 new customers due to an increase in its customer churn estimate from 2.7 percent to 2.9 percent.
Analysts are predicting Sprint PCS will report around 400,000 direct customers during the third quarter, which would be more than double the 189,000 subscribers the carrier added last year. Despite the modest growth compared with its competitors, Sprint PCS likely will see continued robust growth through its indirect and affiliate partners, which could boost the carrier’s total customer growth during the quarter to nearly 1 million subscribers.
With the impending acquisition by Cingular looming ever greater over its operations, AWS has the most varied forecasts for customer growth. Estimates range from 20,000 to 150,000 net subscriber additions during the quarter. While the carrier has shown signs of turning around its WLNP-related operational issues, AWS is still fighting high customer churn that topped out at 3.7 percent during the first quarter of this year, but is predicted to still be between 3.2 percent and 3.4 percent during the third quarter.
If analysts’ predictions prove correct, overall growth from the nation’s largest carriers during the third quarter will fall in line with last year’s totals and set the industry up for its strongest yearly customer growth since 2000.
