AT&T Mobility beat analysts' expectations in terms of subscriber growth for the fourth quarter, but saw churn rise amid intensifying competition. AT&T also saw its margins drop in the quarter, as had been expected.
Verizon Wireless delivered strong subscriber growth in the fourth quarter, beating financial analysts' expectations, but the carrier also saw higher than usual churn and its margins dipped amid increasing promotions. Taken together, the results show that while Verizon continues to show resilience it is not immune to rising competition from Sprint, T-Mobile US and AT&T Mobility.
T-Mobile US CEO John Legere pushed back against media interpretations of recent comments made by Timotheus Hoettges, CEO of T-Mobile parent Deutsche Telekom, which many outlets interpreted as Hoettges saying T-Mobile's torrid growth trajectory is unsustainable long term from a financial perspective.
T-Mobile US was thwarted in its efforts to merge last year with Sprint, but the carrier still needs greater scale in the long term despite all of its recent growth, according to Timotheus Hoettges, CEO of T-Mobile parent Deutsche Telekom. Hoettges also said in the long term T-Mobile's blistering growth is unsustainable from a financial perspective.
With a somewhat bumpy fourth-quarter reporting season expected for the Tier 1 wireless carriers, analysts at Jefferies are hoping for more "rational" pricing behavior from the large operators in 2015.
The continued subscriber momentum at T-Mobile, coupled with solid expected results from Verizon Wireless AT&T Mobility could mean that Sprint struggled in the fourth-quarter to win many net postpaid subscribers, according to financial analysts.
T-Mobile US ended the year with a bang, adding 2.1 million total net wireless customers in the fourth quarter, capping a strong year of growth for the carrier. T-Mobile CEO John Legere has pledged to pass Sprint in subscribers to become the nation's No. 3 carrier largest carrier by subscribers in 2015.
2014 is nearly at and end and it's the time of the year when there are countless year-end review articles and 2015 predictions. While there were many highlights of 2014, I choose to hone in on network and competition. Instead of predictions, my 2015 expectations have been laid out with technology paths and the previous year's events.
Investors last week dumped the stocks of Verizon Communications, AT&T, Sprint and T-Mobile US in a hurry amid growing concerns that the carriers' wireless pricing battles are unsustainable long term and that rising costs of spectrum will combine with the price war to drive down carriers' profitability.
The Wall Street financial analysts who watch the nation's carriers are in a bit of a tizzy this week because Verizon and AT&T, the two dominant players in the market, are warning of pressure on earnings and margins from promotions and higher subscriber growth in the fourth quarter. The analysts are worried because they think the competition from T-Mobile US and Sprint could get more intense. I think that'd be fine if that happens. If Verizon and AT&T lost profits and customers to Sprint and T-Mobile, I'd say that would be a grand development for the U.S. market and would be broadly beneficial for consumers.