As the fourth-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:
iPhone on margins: "The iPhone had a pronounced impact on 4Q11 results: the device helped drive record postpaid ARPU growth and slightly better postpaid sub growth; however, iPhone subsidies crushed margins," wrote Credit Suisse analysts Jonathan Chaplin and Felix Wai in a recent research note subtitled "The Quarter In Which Apple Ate The Industry's Profits."
The fourth quarter was the first sales period for the new iPhone 4S, and also represented the entry of Sprint Nextel (NYSE:S) into the iPhone game; Sprint joined larger rivals Verizon Wireless (NYSE:VZ) and AT&T Mobility (NYSE:T) in selling the device during the fourth quarter. According to Credit Suisse, carrier subsidies increased 40 percent as a result of the launch of the iPhone and other smartphones--driving carrier margins to their lowest levels in the past five years. But, according to the firm, "margins will improve in 1Q12 and there is the potential for improved trends later in the year if the carriers can hold the line on tighter upgrade policies."
As Strategy Analytics analyst Philip Kendall noted, Sprint notched a solid quarter of iPhone activations (1.8 million), with 40 percent of Sprint's iPhone subscribers coming from other networks. However, Sprint's iPhone performance didn't have an impact on the strong volumes at Verizon (4.3 million activations) and AT&T (7.6 million).
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Click here for Strategy Analytics' list of the top 10 carriers in the United States in the fourth quarter. |
A prepaid slowdown: Credit Suisse's analysts noted that growth in the prepaid market slowed, likely due to aggressive postpaid handset promotions--specifically the free iPhone 3GS at AT&T (available only with a two-year contract). The firm found that 38 percent of all of the industry's net adds in the fourth quarter were postpaid net adds, while the remaining 62 percent were prepaid net adds. In the third quarter, 35 percent of all the industry's net adds were postpaid, and 65 percent were prepaid. In the fourth quarter of 2010, just 29 percent were postpaid and fully 71 percent were prepaid.
Interestingly, Strategy Analytics' Kendall found that major prepaid carriers like MetroPCS (NYSE:PCS) and Leap Wireless (NASDAQ:LEAP) reported relatively strong fourth quarters, as did Sprint's prepaid business (which spans the Boost Mobile, Virgin Mobile and Assurance Wireless brands). Even Verizon enjoyed prepaid success--Kendall said Verizon recorded its first positive quarter of prepaid net adds in the past two years, largely as a result of its new nationwide $50 Verizon Unleashed prepaid offering.
LTE and 4G: In terms of subscriber numbers, Clearwire (NASDAQ:CLWR) continued to perform well in the fourth quarter, racking up 1.8 million gross net adds to bring its subscriber base to 10.4 million customers. Verizon too ended the year strong, notching 1.6 million LTE smartphones and 700,000 LTE Internet data devices in the quarter. And AT&T, Sprint and T-Mobile are each in various stages of catching up with their own LTE rollouts.
For a complete analysis of wireless carriers in the fourth quarter, make sure to check out Strategy Analytics' list of the top 10 carriers in the United States in the fourth quarter. +Mike Dano