T-Mobile poached customers from both Verizon and AT&T as competition ramped up at the end of 2016, according to a series of recent research notes from Wells Fargo Securities. And Sprint may not have fared as well as expected during the holiday season.
Analyst Jennifer Fritzsche raised the firm’s estimate for net postpaid phone additions during the fourth quarter to 911,000, up from the previous estimate of 839,000. Fritzsche also increased T-Mobile’s estimated quarterly revenue to $9.82 billion, up slightly from the previous $9.79 billion.
“Specifically, our checks have shown a strong quarter of postpaid phone adds, with T-Mobile continuing to take share in particularly from the Big 2 incumbents,” Fritzsche wrote late last week. “T-Mobile has been strategically promotional in Q4, including a ‘free’ iPhone 7 offer with eligible trade-in around Black Friday and a discount to its T-Mobile One Plus plan.”
T-Mobile likely saw between 150,000 and 200,000 customers migrate from prepaid to postpaid during the quarter, Fritzsche continued, slightly fewer than reported during the previous quarter.
Meanwhile, Wells Fargo revised its fourth-quarter estimates for Verizon, saying the country’s largest carrier likely saw 715,000 net postpaid adds, down from the previous estimate of 856,000. And the firm lowered its estimate for Verizon’s net handset adds during the quarter to 57,000, down from 180,000.
“Verizon primarily targeted equipment promotions, such as a ‘free’ iPhone 7 with an eligible trade-in (around Black Friday and again from December 15-22),” Fritzsche observed. “These promotions and higher seasonal advertising spend will pressure Q4 wireless EBITDA margins – we are lowering our estimate from 41% to 37.3%. While these promotions should support solid smartphone net additions, Verizon continues to see headwinds from basic phone losses and tablet churn from previous promotions rolling off.”
And those aggressive promotions from T-Mobile and Verizon were likely costly to Sprint. Fritzsche lowered her estimate for Sprint’s net postpaid adds during the quarter to 350,000, down from 450,000, and also decreased the carrier’s estimated revenue to $32.3 billion, down from the previous $32.5 billion.
“We have taken a more conservative forecast on both churn and gross adds” for Sprint, Fritzsche wrote in yet another research note last week. “The competitive environment in the last three weeks of December saw a dramatic pick-up in promotions … While Sprint engaged in some promos, it has taken a more conservative stance for the most part, and was the only one of the four national wireless players not to offer a free iPhone over Thanksgiving weekend.”