Verizon Wireless (NYSE: VZ) is expected to post substantial progress in the third quarter with 1.3 million postpaid net customer additions, according to analysts at Credit Suisse. AT&T Mobility (NYSE: T), for its part, will report the addition of 800,000 postpaid net customers, the analysts predicted.
Verizon is scheduled to report its third quarter results tomorrow and AT&T is scheduled to post its own results the day after.
Importantly, the Credit Suisse analysts raised their customer addition expectations for both Verizon and AT&T. Previously, the analysts expected Verizon to report just 675,000 new postpaid additions, but they increased that number to 1.3 million thanks to tablet and iPhone sales. "Verizon has been able to maintain strong subscriber trends while remaining less aggressive on pricing than peers," wrote Joseph Mastrogiovanni and Michael Baresich in a note to investors. "With Sprint having some success with new pricing in September, we're looking for management to discuss its ability to maintain the current course. We've seen some response from Verizon, but compared to peers it's been mild. We think Verizon could become somewhat more promotional in 4Q14."
However, the analysts said that the increase in Verizon's customer additions will come at the expenses of the carrier's margins. They analysts said they are lowering their expectations for Verizon's wireless margin to 50.1 percent.
As for AT&T, the analysts also raised their expectations for customer additions, from a previous expectation of 500,000 to their current estimate of 800,000 postpaid net additions.
"We believe AT&T continued to see solid subscriber momentum in 3Q14," Mastrogiovanni and Baresich wrote. "The company has allowed its subscriber base to move to lower priced plans, which we expect to drive postpaid churn of 0.95%. This puts some pressure on ARPU, which is being partially offset by better uptake of insurance, migration to bigger data plans and the amortization of imputed interest from Next to service revenues."
Verizon and AT&T's results likely will include some sales of Apple's new iPhone 6 and 6 Plus, which went on sale shortly before the end of the third quarter. iPhone launches generally result in notable upticks in U.S. carriers' quarterly performance as exiting and new iPhone owners activate their devices.
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