Fourth quarter expected to be iPhone-dependent for domestic carriers


With the fourth quarter just about at an end, analysts at Wells Fargo Securities updated their forecasts for what they expect the nation’s top four carriers to report for the final three months of 2011.

The firm said it expects Verizon Wireless (VZ) to again lead the market in share gains during the quarter thanks to an industry leading 1.3 million postpaid net customer additions. The nation’s largest carrier is expected to see a strong boost from iPhone sales, with Wells Fargo estimating 3.5 million sales during the quarter, which might put some pressure on the carrier’s margins as the device typically requires a higher subsidy.

AT&T Mobility (T), fresh off its failed attempt to acquire T-Mobile USA, is expected to add 530,000 postpaid net additions during the quarter, with industry leading sales of Apple’s iPhone device. Wells Fargo Securities noted that the carrier could post 7 million iPhone sales during the quarter, with 80% of those coming from upgrades through current customers. Similar to Verizon Wireless, the strong iPhone sales are expected to impact the carrier’s margins.

Sprint Nextel (S) is forecast to post only its second quarter of postpaid net customer additions since 2005, with strong sales coming from the recent addition of the iPhone to its portfolio. Wells Fargo Securities said it expects the carrier to post the largest percentage of new iPhone additions. However, the firm was more cautious on Sprint Nextel’s attempt to improve customer churn, with channel checks indicating a higher involuntary churn trend during the quarter. Overall, Wells Fargo Securities expects the carrier to add 303,000 customers during the quarter, which was slightly below other estimates.

T-Mobile USA is expected to show continued strain during the quarter, with Wells Fargo Securities noting particular struggles in the postpaid segment due to the carrier’s lack of iPhone offering. The firm noted that customers have been defecting from T-Mobile USA to its three larger rivals and that recent attempts to attract customers through handset promotions have proven unsuccessful. The carrier is expected to post a loss of more than 500,000 postpaid customers during the quarter, though its prepaid operations could prove a bright spot.

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Dan Meyer

Editor-in-Chief, Telecom Software, Policy, Wireless Carriers
Dan Meyer started at RCR Wireless News in 1999 covering wireless carriers and wireless technologies. As editor-in-chief, Dan oversees editorial direction, reports on news from the wireless industry, including telecom software, policy and wireless carriers, and provides opinion stories on topics of concern to the market such as his popular Friday column “Worst of the Week.”