With wireless scheduled to start releasing third quarter results in the coming days, analysts have begun to place their cards on the table as to what we should expect.
(Check out Q2 2011 results here.)
Many noted that with Apple pushing off the launch of its latest iPhone from its regular early third quarter time frame to the fourth quarter for this year, results could be a little flat as consumers awaited the arrival of the latest iPhone iteration. Also weighing heavily across the domestic space is the ongoing saga that is AT&T’s pending $39 billion acquisition of T-Mobile USA, which has been a rollercoaster ride of whether it will or will not be approved by regulators.
Macquarie Equities Research noted that overall it expects margins for the nation’s larger wireless operators to improve during the third quarter as smartphone upgrades and postpaid gross customer additions likely slowed. Carriers are often forced to hand over larger device subsidies for smartphones, which in turn hit their bottom line.
Verizon Wireless is expected is see strong postpaid growth for the quarter and continued robust wireless margins, though overall customer growth is forecast to come in at less than 1 million net subscriber additions. The carrier managed to add 1 million customers during the third quarter of 2010, results that were fueled by strong postpaid net additions overcoming defections from its branded prepaid service.
A similar fate is expected at AT&T Mobility, which in recent quarters has relied more heavily on prepaid customers than Verizon Wireless, but has also seen success in offering a broader price range for its iPhone lineup. Wells Fargo Securities noted that channel checks during September showed slower than normal activities at AT&T Mobility retail outlets, and said it expects the carrier to post around 330,000 postpaid customer additions for the quarter. The firm did note that smartphone sales appeared to remain strong, which could boost average revenue per user to more than $64 for the quarter.
The firm noted that Sprint Nextel appeared to have seen less of impact from the lull than did rivals AT&T Mobility and Verizon Wireless as the carrier was not certain to be receiving the new iPhone until late in the quarter. However, Sprint Nextel could see a seasonal spike in customer churn due to its high reliance on prepaid customers, something that could also impact MetroPCS Communications and Leap Wireless.
Speaking of the regional players, Macquarie notes that they could also see a drop in gross customer additions, which if combined with increased churn rates could spell trouble for overall growth. MetroPCS did manage to post modest customer growth during the third quarter of 2010, while Leap Wireless witnessed nearly 200,000 customers leave its network.
Not much is expected from T-Mobile USA, which continues to operate under the cloud of AT&T’s pending acquisition proposal. The carrier has seen some modest gains earlier in the year turn into customer defections despite aggressive pricing models and device launches.
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