WOTW hands out gut influenced quarterly results grades for AT&T, Verizon, T-Mobile and Sprint, and you might be surprised who the gut favors
Hello! And welcome to our Friday column, Worst of the Week. There’s a lot of nutty stuff that goes on in this industry, so this column is a chance for us at RCRWireless.com to rant and rave about whatever rubs us the wrong way. We hope you enjoy it!
And without further ado:
Placing too much emphasis on quarterly earnings is a tricky proposition as it’s tough to get a big picture look into how a company is doing based solely on what it did during a three-month period. However, these quarterly slices are a good way to at least see which direction that company may be heading and provide some insight into how it gets to wherever it end up.
And thus, this week we take a look at the most recent quarterly results from the domestic market’s four largest wireless carriers, which following Sprint’s fourth quarter (don’t ask) announcement earlier in the week, completed the reporting task. Now, numbers will be an important part of this analysis, but as I am not a big believer in numbers, they will be joined by my “gut fact checker” in brining an overall view to the results and help with final grades.
Let’s start with Verizon Wireless, which as part of Verizon Communications was the carrier that kicked off the reporting process. Now, I do have to give Verizon a bit of credit for indeed going first as it shows a certain confidence in being set up as the main point of comparison – both good and bad – for all rivals.
But, looking at the numbers it would appear Verizon Wireless had a rather average quarter in that these results could basically be interchanged with just about any previous quarter for the carrier over the past decade. That’s not to say it was a bland quarter for Verizon Wireless, and in fact looking at least in terms of growth the quarter was sort of down a bit in terms of performance. So, from a numbers perspective, Verizon Wireless’ Q1 results get a “C-” grade.
Now, when I bring in the gut, we see a different perspective. Verizon Wireless has traditionally been a carrier that has led with modest expectation, only then to outperform those forecasts to the surprise of those on the outside, but obviously not to those on the inside. The latest quarter indeed included hints from management that it would not be a spectacular performance, which it turned out not to be. Thus, the gut is impressed with this honesty and leaning towards upping the grade.
However, Verizon Wireless remains a carrier shrouded in secrecy as the carrier provides far fewer details in terms of performance compared with rivals, and this leads my gut to not trust whatever in the hell is going on over there and leans towards a lower grade. Come on Verizon, open up a bit. Let us know the real you.
Net-net, Verizon gets a “C” grade.
Next, we take on AT&T Mobility, which while often grouped with rival Verizon Wireless in terms of their overall competitiveness, gets a gut bump for being more upfront with just what in the hell is going on over there. For instance, AT&T Mobility is more than happy to tout its “connected device” growth seeing that the segment is its most significant growth driver. The gut says “if you have a fever for cow bell, then give it more cow bell!”
And, unlike Verizon Wireless, AT&T Mobility is on the prepaid train thanks to some fine execution at Cricket Wireless. The gut has a bit of a soft spot for Cricket’s early days (shout out to the green couch!), and thus likes to see at least the name continue to shine.
But, parent company AT&T is currently in the midst of juggling a lot of operating balls, which seemed to result in a lack of focus for AT&T Mobility Q1 results and pushing down its grade a bit.
Thus, AT&T Mobility comes out of Q1 with a “C+” grade.
No. 3 to the plate is T-Mobile US, which from an operational numbers standpoint scored a solid “A” grade in terms of its Q1 performance. That performance is also beginning to impact financial performance, which while still lagging behind its larger rivals, is showing numerical improvements.
But, the gut continues to have a hard time taking T-Mobile US seriously when its management team continues to try a bit too hard in making itself different. We have already touched on this sentiment in past WOTW columns, and for the most part those feelings have only strengthened.
I think one of the best ways to describe where the domestic market was today in terms of competitive positioning was offered up by Recon Analytics’ Roger Entner, who on a recent episode of our “Carrier Wrap” show noted T-Mobile US has become the perfect example of what it tries so hard to push off onto its larger rivals: a traditional mobile carrier. It’s singularly focused on growing its postpaid and prepaid base, which is obviously smart in terms of value and I am guessing T-Mobile US would be perfectly happy with 200 million smartphone customers, but also seems to be taking away any sort of broader views on what the mobile telecom space can be.
Trust me, I have as many questions as the next cynic in terms of how the mobile telecom space is going to support the growing mass of devices looking to connect through fragile cellular networks. But, it’s probably a good idea to at least begin to throw some serious attention in that direction, which T-Mobile US at this point seems unwilling to do.
Thus T-Mobile US gets a negatively gut-influenced “B” grade.
Last, but certainly not least – though indeed last in terms of both size compared to nationwide carriers and in the order in which it reported results, so basically least and last – we get to Sprint.
Now, we have killed dozens of virtual trees in this space questioning whatever the hell it is that Sprint is or has been doing. Thus, I will try to leave those issues behind in looking just at Q1 results.
What the hell am I saying?!? When it comes to Sprint, there is no way one can leave out what’s happened over the past several years! The gut won’t allow it!
If we were to take Sprint’s latest quarterly results without any sort of context, it would appear the carrier had a solid quarter in some respects, though challenged in others. But, we all know the areas where Sprint seemed to impress were bolstered by moves sure to further dampen progress in areas that continue to struggle.
Sprint management touted its recent ability to raise funds needed to pay back upcoming debt maturities, but in doing so it looked like it also did not get the best of terms in gaining some of those funds. Should Sprint manage to turn around operations, those terms may not matter. But, should the carrier continue to struggle, the first three months of 2016 could be viewed as the inflection point.
However, the gut says screw the numbers and inflection points. The fact Sprint management continues to publicly brush aside all the doom and gloom continues to impress, and itself shows some real guts. I am sure there a many out there that if in Sprint’s shoes would have called it quits by now. So, just the fact Sprint remains is enough for this gut.
As such, the gut shows its confidence in proudly stamping Sprint with an “A” grade.
Dare to question the gut? Let me know what you think each of these carriers deserved for the latest quarterly performance.
I welcome your comments. Please send me an e-mail at dmeyer@rcrwireless.com.
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