Analysts: T-Mobile Uncarrier momentum accelerating into Q1, handset financing programs catching fire
According to a new research note from analysts at Jefferies, T-Mobile US (NYSE:TMUS) is poised to step up its momentum in the market with increased subscriber gains in the first quarter. According to the analysts, those gains will likely be at the expense of Sprint (NYSE: S).
"After positive management commentary at investor conferences, and recent price increases, we believe the company's record 4Q subscriber momentum likely continued into 1Q," Jefferies analysts wrote of T-Mobile. "As such we have raised our 1Q postpaid net add estimates from 1.0 million to 1.1 million, and fiscal year 2014 from 3.1 million to 3.2 million, above guidance of 2-3 million."
Indeed, T-Mobile executives have made no secret of their belief that the company will continue to enjoy success in 2014 from its Uncarrier promotions. In February, T-Mobile said it expects to garner an additional 2 million to 3 million new customers during the full-year 2014, and will grow its annual adjusted EBITDA to between $5.7 billion to $6 billion. "We expect that the pace of growth will continue even further in 2014," T-Mobile CEO John Legere said at the time.
Jefferies analysts aren't the only ones predicting continued success for T-Mobile. New Street Research analysts last month noted that T-Mobile "could easily add" 1.1 million new subscribers in the first quarter, compared to their previous estimate of around 810,000. The analysts expect the impact of T-Mobile's ETF offer--which gives customers who switch to T-Mobile up to $650 in early termination fee payments and device trade-in credits--to fade over the course of the year, but they said "the company is on track to beat 2014 postpaid net add guidance" of 2 million to 3 million new customers.
Separately, for AT&T Mobility (NYSE: T) and Verizon Wireless (NYSE: VZ), Jefferies analysts predicted increased sales of the companies' respective handset financing programs, beyond what they previously expected. AT&T finances smartphones and other devices through its Next program, while Verizon offers similar services through its Edge offering. Both carriers have taken steps in recent months to make their respective handset financing plans more attractive by reducing service costs for customers who elect to pay for their phones through the monthly installment plans.
Specifically, for AT&T, Jefferies analysts predict that fully 46 percent of eligible AT&T subscribers will sign on to the carrier's Next program this year, up from a previous forecast of 32 percent. By next year, the analysts predict fully 70 percent of subscribers will opt for the plans (up from just 35 percent).
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