Following impressive fourth-quarter customer numbers from Verizon and T-Mobile, one analyst is warning that AT&T and Sprint may report more sluggish fourth-quarter results than expected.
“VZ [Verizon] handily beat Street expectations for postpaid phone net additions, reporting 431K in Q4 vs. Street consensus of 282K—its highest add quarter since Q4’15. TMUS [T-Mobile] also already pre-released its subscriber add metrics for Q4, adding +891K net postpaid phones (ahead of the Street at 810K at the time),” wrote Wells Fargo analyst Jennifer Fritzsche in a note to investors today. “Taken together, we would not be surprised to see a downward bias to both T [AT&T] and S [Sprint] postpaid handset adds with a smaller gross add ‘jump ball’ given low switching and upgrade activity. For both of these companies, we are below the Street in our net phone add assumptions.”
T-Mobile earlier this month released some initial fourth-quarter numbers, reporting that it gained 1.1 million total net branded postpaid additions during the period, 891,000 of which were phone customers. The carrier said it ended the year 3.6 million branded postpaid net customer additions, hitting the top of the range of 3.3 million to 3.6 million such subscribers.
And Verizon earlier this week reported a net increase of 1.2 million retail postpaid connections in the fourth quarter of 2017, a figure that included 647,000 smartphone net additions. That's an increase from 456,000 smartphone net adds in the same quarter a year ago. Verizon’s total customer figures for the fourth quarter of 2017 also included the addition of 193,000 tablets and 550,000 other devices, mostly led by wearables.
It's that strong fourth-quarter performance by two of the nation’s leading wireless network operators that is casting a cloud over AT&T and Sprint. Just before Verizon announced its results, Wells Fargo predicted AT&T would report postpaid net customer additions of 300,000, below Wall Street expectations of 359,000. For Sprint, Wells Fargo said it expects the carrier to notch postpaid net phone additions of 200,000, a figure also below Wall Street expectations of 247,000.
“In general, we think gross add activity was more muted relative to a typical Q4, with net additions more driven by lower industry churn and upgrades,” Wells Fargo’s Fritzsche wrote last week, prior to Verizon’s earnings report but after T-Mobile’s announcement. “We think more of the focus will be on 2018 guidance and pricing dynamics throughout 2018, which we expect to remain relatively rational.”
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AT&T is scheduled to release its fourth-quarter results on Jan. 31, while Sprint is scheduled to report its own results Feb. 2. T-Mobile has not yet officially scheduled the release of its full fourth-quarter 2017 results.