Light Reading

Slim Postpaid Pickings for Sprint, T-Mobile

Sarah Thomas
7/25/2014
50%
50%

AT&T and Verizon's reduced churn and stable mobile customer gross adds in the second quarter likely doesn't bode well for its smaller two rivals, which report next week, because it suggests there have been fewer postpaid mobile subscribers left for Sprint and T-Mobile to poach.

Bernstein Research analysts believe that both Sprint Corp. (NYSE: S) and T-Mobile US Inc. will report reduced net postpaid phone additions when they reveal their second quarter earnings next week. Instead, they will bolster their financials with tablet sales and prepaid customer additions. And, notes analyst Paul de Sa, shifting from device subsidies to installation payments and new pricing plans will boost their numbers as well. (See Sprint Plans More Bundled-Content Offers, Sprint Launches No-Sharing 'Framily' Plans and T-Mobile Sacrifices Costs for Customers.)

What this shows, writes de Sa in a research note, is that these two US carriers are really now mostly competing with each other, and less so with AT&T Inc. (NYSE: T) and Verizon Wireless . If that's the case, it's going to make winning approval for their merger less likely than ever. (See DT Asks for $1B Prenup for Sprint, T-Mobile — WSJ and Is SoftBank Ready to Reunite With Legere?)

AT&T and Verizon reported relatively flat postpaid smartphone additions of 707,000 and 304,000 respectively, in this latest quarter. Churn was also low -- just 0.84% at Verizon and 0.86% at AT&T, it's lowest churn ever. (See AT&T: Capex Freeze? What Capex Freeze?, Verizon Continues 4G LTE Capacity Spend in Q2 , Verizon Loses Its Postpaid Net Add Crown, and AT&T Adds 625K Postpaid Subs in Q1.)


Light Reading has all your earning news. Check back to our news and views queue daily for updates.


These numbers are bad news for Sprint and T-Mobile, which has been goading AT&T and bragging about stealing its customers. Bernstein's de Sa suggests that Sprint will lose the most customers in the second quarter, including price sensitive ones that will flee to T-Mobile. (See T-Mobile Sacrifices Costs for Customers.)

Jefferies & Company Inc. analysts took it even further, noting this week that they expect Sprint to report 879,000 handset subscriber losses for the quarter, making it one of the worst in Sprint's history. (See Sprint Feels the Churn Burn Before Spark.)

The bright spot in all this for Sprint, as well as T-Mobile, will be in prepaid subscribers and tablets. Even though neither includes tablets in shared data plans (which AT&T and Verizon do), T-Mobile has been pricing them aggressively. In addition, de Sa says that AT&T's gap between killing its low-end prepaid brand Aio and scaling up Cricket was good for Sprint and T-Mobile, which captured some of its customers that left in the hiatus. (See Tablets Grow Like 'OMG' in Q1, T-Mobile Drops LTE iPad Prices to WiFi Levels, and AT&T Plans a Prepaid Cricket Attack.)

"T-Mobile's MetroPCS brand will likely be the primary beneficiary, having expanded into Cricket geographies, although these gains are unlikely to continue much past the next quarter as AT&T begins to aggressively expand its prepaid presence," de Sa writes. "Sprint may also face continuing prepaid losses due to Lifeline audits removing (low ARPU) connections from its Assurance brand."

Sprint reports its second-quarter earnings on Wednesday, July 30, and T-Mobile reports on Thursday, July 31. Check Light Reading for all the details then.

— Sarah Reedy, Senior Editor, Light Reading

(3)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
danielcawrey
50%
50%
danielcawrey,
User Rank: Light Sabre
7/26/2014 | 12:00:42 PM
Re: Sprint
Does Sprint still have relatively poor coverage? I know that this is generally true when it some to T-Mobile, so I would have to think that T-Mobile's flashy ad campaigns are hitting true a certain  demographic that is looking to leave Spring. 
smkinoshita
50%
50%
smkinoshita,
User Rank: Light Sabre
7/25/2014 | 10:04:13 PM
Re: Sprint
Up here North of the border, Sprint Canada was eaten up by Rogers.  The only 3rd party we have for mobile is Wind, and as far as our major networks are concerned it's either Rogers or Bell.  (Rogers is aligned with AT&T South of the border).
SReedy
50%
50%
SReedy,
User Rank: Blogger
7/25/2014 | 11:57:55 AM
Sprint
Sprint is clearly the one hurting the most in the US. It also has the highest paid CEO in the entire industry; now some are saying it's way too much. We'll see if he's able to defend his earnings in Q2, but it's doubtful as all Sprint's past guidance isn't for improvements until Q4.
Flash Poll
From The Founder
Last week I dropped in on "Hotlanta," Georgia to moderate Light Reading's inaugural DroneComm conference – a unique colloquium investigating the potential for drone communications to disrupt the world's telecom ecosystem. As you will see, it was a day of exploration and epiphany...
LRTV Documentaries
Verizon's Emmons: SDN Key to Cost-Effective Scaling

5|22|15   |   03:53   |   (0) comments


For Verizon and other network operators to ramp up available bandwidth cost effectively, they need to move to SDN and agree on how to do that.
LRTV Documentaries
Lack of Universal SDN a Challenge

5|21|15   |   04:51   |   (3) comments


Heavy Reading Analyst Sterling Perrin talks about how uncertainty about SDN standards and approaches may be slowing deployment.
LRTV Custom TV
Steve Vogelsang Interview: Carrier SDN

5|20|15   |   05:02   |   (0) comments


Sterling Perrin speaks to Steve Vogelsang, Alcatel-Lucent CTO for IP Routing & Transport business, about the new Carrier SDN-enabling Network Services Platform and the operator challenges it solves.
LRTV Custom TV
Carrier SDN: On-Demand Networks for an On-Demand World

5|20|15   |   20:52   |   (0) comments


Steve Vogelsang, Alcatel-Lucent CTO for IP Routing & Transport business, talks about requirements and benefits of Carrier SDN during the keynote address at the Light Reading Carrier SDN event May 2015.
LRTV Documentaries
The Security Challenge of SDN

5|19|15   |   02:52   |   (0) comments


CenturyLink VP James Feger discusses concerns that virtualization could create new vulnerabilities unless network operators build in safeguards.
LRTV Custom TV
NFV Elasticity – Highly Available VNF Scale-Out Architectures for the Mobile Edge

5|18|15   |   5:50   |   (0) comments


Peter Marek and Paul Stevens from Advantech Networks and Communications Group talk about their NFV Elasticity initiative and the company's latest platforms for deploying virtual network functions at the edge of the network. Packetarium XL and the new Versatile Server Module: 'designed to reach parts of the network that other servers cannot reach.'
LRTV Huawei Video Resource Center
Bay Area Spark Meetup 2015

5|14|15   |   3:54   |   (0) comments


Developed in 2009, Apache Spark is a powerful open source processing engine built around speed, ease of use and sophisticated analytics. This spring, Huawei hosted a meetup for Spark developers and data scientists in Santa Clara, California. Light Reading spoke with organizers and attendees about Huawei's code contributions and long-term commitment to Spark.
LRTV Custom TV
The Transport SDN Buzz

5|12|15   |   06:01   |   (1) comment


Sterling Perrin, senior analyst at Heavy Reading, speaks with Peter Ashwood-Smith of Huawei and Guru Parulkar of ON.Lab about the evolution of transport SDN and the integration of technologies.
LRTV Custom TV
Next-Generation CCAP: Cisco cBR-8 Evolved CCAP

5|5|15   |   04:49   |   (0) comments


John Chapman, Cisco's CTO of Cable Access Business Unit and Cisco Fellow, explained the innovation design of Cisco's cBR-8, the industry's first Evolved CCAP, including DOCSIS 3.1 design from ground-up, distributed CCAP with Remote PHY and path to virtualization. Cisco's cBR-8 Evolved CCAP is the platform that will last through the transitions.
LRTV Custom TV
Meeting the Demands of Bandwidth & Service Group Growth

5|1|15   |   5:35   |   (0) comments


Jorge Salinger, Comcast's Vice President of Access Architecture, explains how DOCSIS 3.1 and multi-service CCAP can meet the demands of the bandwidth and service group growth.
LRTV Custom TV
DOCSIS 3.1: Transforming Cable From Hardware-Defined Network to Software-Defined Network

4|29|15   |   03:48   |   (0) comments


John Chapman, Cisco's CTO of Cable Access Business Unit and Cisco Fellow, explains how DOCSIS 3.1 can transform cable HFC network to a more agile software-defined network.
LRTV Huawei Video Resource Center
Predicting Traffic Patterns for Quality Mobile Broadband

4|29|15   |   6:45   |   (0) comments


Accessing information ubiquitously creates complexity and creates heavy traffic onto the network, especially at large-scale events like sporting events or festivals. In this video, Huawei's Mohammad Hussain speaks to experts about how to predict traffic and improve user experience during periods of heavy traffic.
Upcoming Live Events
June 8, 2015, Chicago, IL
June 9, 2015, Chicago, IL
June 9-10, 2015, Chicago, IL
June 10, 2015, Chicago, IL
September 29-30, 2015, The Westin Grand Müchen, Munich, Germany
October 6, 2015, The Westin Peachtree Plaza, Atlanta, GA
October 6, 2015, Westin Peachtree Plaza, Atlanta, GA
All Upcoming Live Events
Infographics
Network functions virtualization (NFV) is not the easiest of topics to take on board, so here's a Light Reading infographic, developed following conversations with the folks at HP, that helps make sense of where NFV is taking the industry.
Hot Topics
Verizon Saves 60% Swapping Copper for Fiber
Sarah Thomas, Editorial Operations Director, 5/19/2015
Choosing a Technology Supplier? Consider Changing Your Selection Criteria
Steve Saunders, CEO and founder, Light Reading, 5/18/2015
Chattanooga Charts Killer Gigabit Apps
Mari Silbey, Senior Editor, Cable/Video, 5/20/2015
10 Alternate Uses for Tablets
Eryn Leavens, Copy Desk Editor, 5/22/2015
Smarter 'Dumb' TVs Will Drive OTT Adoption
Mari Silbey, Senior Editor, Cable/Video, 5/18/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
With 200 customers in 60 countries, Stockholm-based Net Insight has carved out a solid leadership position in one of the hottest vertical markets going in comms right now: helping service providers and broadcasters deliver video and other multimedia traffic over IP networks. How has Net Insight managed to achieve this success in the face of immense competition from the industry giants?
My ongoing interview tour of the leading minds of the telecom industry recently took me to Richardson, Texas, where I met with Rod Naphan, CTO and SVP, Solutions, ...
I recently popped down to Texas to chat with CEO Eric L. Pratt about his company, Taqua.
Cats with Phones