As the first-quarter reporting season comes to a close, it's time to start parsing the information to see which carriers slipped and which managed to get ahead.
Here are some of the big themes from the quarter:
The ThunderBolt and the iPhone
While the first quarter is usually a relatively quiet period in the wireless industry since it trails the fury of the fourth-quarter holiday shopping season, this year's first quarter was anything but. The combination of the Apple (NASDAQ:AAPL) iPhone and the LTE-capable HTC ThunderBolt at Verizon Wireless (NYSE:VZ) set the stage for major competitive upheaval, as AT&T Mobility (NYSE:T), T-Mobile USA, Sprint Nextel (NYSE:S) and the rest of the market worked to respond.
So what was the result? The big winner was Apple, which managed to sell massive numbers of iPhones through both Verizon Wireless and AT&T (Verizon activated 2.2 million iPhones and AT&T activated 3.6 million). Indeed, the Verizon iPhone didn't seem to damage AT&T as much as many had expected--AT&T executives noted the carrier's iPhone churn remained relatively stable during the period, likely helped by the carrier's large number of iPhone customers on contract.
However, iPhone subsidies did affect Verizon's margins.
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Click here for the top 10 wireless carriers in the first qurater. |
Interestingly, the iPhone and ThunderBolt at Verizon also didn't have much of an impact on Sprint Nextel either; the nation's No. 4 carrier had another solid, if not spectacular, quarter. Although Sprint couldn't quite repeat the positive postpaid net adds it scored in the fourth quarter of last year, it did achieve solid retail net adds as its prepaid business continued to grow.
T-Mobile's troubles
The real dud during the first quarter was T-Mobile, which lost nearly 500,000 retail postpaid customers in the quarter. Further, most of T-Mobile's prepaid growth came from the MVNO market rather than the T-Mobile brand. The carrier also looks to be having trouble responding to the price fighters in the market: MetroPCS (NYSE:PCS), Leap Wireless (NASDAQ:LEAP), Boost Mobile and TracFone.
Smartphones and prepaid
The market's smaller players--specifically MetroPCS and Cricket provider Leap--managed solid gains during the quarter, and both noted the effectiveness of inexpensive Android phones among their customers. Leap said a whopping 40 percent of its first quarter sales were smartphones.
Connected devices
While the market's focus remains on postpaid service plans and smartphones, the nation's top carriers continue to rack up serious business in the connected device category, which stretches from prepaid tablets to machine-to-machine connections. AT&T continued to do well, with around three-fourths of its 421,000 net adds in the segment coming from tablets. Verizon Wireless almost matched that growth, with 364,000 connected device net additions. A good proportion of Verizon's growth came from its LTE network, where modem sales performed well.
The real news: The AT&T/T-Mobile merger
Of course, the real news of the first quarter came not from quarterly reports but from AT&T's proposal to acquire T-Mobile USA for $39 billion. The deal faces significant regulatory hurdles, but the two companies continue to expect to close the transaction by next year. If the deal does in fact go through, the merger would radically reshape the U.S. wireless carrier market, catapulting AT&T far in front of Verizon Wireless in terms of subscribers.
For a complete analysis of wireless carriers in the first quarter, make sure to check out Strategy Analytics' list of the top 10 carriers in the United States in the first quarter. --Mike