AT&T Mobility (NYSE: T) and Verizon Wireless (NYSE: VZ) are expected to report weaker postpaid subscriber growth when they report their first quarter earnings this week, according to analysts' estimates.
The nation's two largest carriers are each expected to report net wireless subscriber additions of around 1.5 million customers in the quarter. However, according to analysts' predictions, only about one-third of that total will be postpaid subscribers for each carrier. The first quarter is usually weaker than the fourth quarter holiday phone shopping season.
AT&T, which earlier this month said it expects its wireless operating margin to increase due to a change in how it reports transactions between units, is expected to report a wireless margin of around 37 percent. However, the company likely will see a drop in wholesale net subscriber additions, according to a report from analysts at Jefferies & Company, due in part to a decline in the number of devices such as ereaders activated in the quarter. The firm is forecasting 550,000 postpaid net adds in the quarter for AT&T and around 1 million wholesale net adds.
Verizon, meanwhile, is expected to see strong growth in the number of non-contract customers on its network. Analysts at Jefferies said they are reducing estimates for net subscriber growth down from 1.65 million to 1.5 million because of slower postpaid growth, offset somewhat by increases in prepaid, wholesale and machine-to-machine customers. Verizon benefited in the fourth quarter from reseller subscriber growth--the company's network is used for TracFone's Straight Talk prepaid unlimited service--a trend that is likely to continue. Jefferies thinks Verizon's average revenue per user will remain relatively stable at $49.35, down 1.7 sequentially and down 2.7 percent year-over-year.
Both AT&T and Verizon have benefited in recent quarters from increased mobile data revenue--and have begun up-selling customers on data plans to counteract declining voice revenues. In January, both carriers cut the price of their unlimited voice plans but also began requiring that customers who buy quick messaging and multimedia phones also get data plans.
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