The third quarter has been busy: AT&T Mobility Inc. released the 3G iPhone; Sprint Nextel Corp. said that its iDEN network may be on the market and the economy fell apart. This last issue has pushed speculation that carriers may see impacted earnings and an increase in customer drop-off. In general, industry analysts said sunny skies are ahead, but beware of a brief cold front.

Sprint Nextel has been steadily losing subscribers and this quarter may be no different. Tom Watts and Jennifer Adams of Cowen and Co. wrote in a research note they expect Sprint Nextel to post a loss of around 1 million customers for the period.

The Cowen & Co. report predicts that the nation’s No. 3 carrier will see a sequential increase in churn from 2% during the second quarter to 2.3% for the third quarter.

Tole Hart, analyst for Gartner, agrees that Sprint Nextel will stay consistent with its dismal results each quarter.

“Sprint is hard to say,” Hart said. [They’ll do] about the same as they did in prior quarters, which is losing a lot of customers.”

However, Sprint Nextel’s wide amount of spectrum as well as its continuing efforts to clean up its 800 MHz holdings used for its iDEN service should help the carrier in the long run.

“Network quality has improved due largely to completed spectrum re-banding,” the Cowen & Co. report added.

Things don’t look quite as cloudy for AT&T Mobility, though predictions have been dialed back a touch. Cowen & Co. noted the release of Apple’s 3G iPhone, while a boon for the carrier’s customer numbers, could hurt the carrier’s bottom line in the near-term. Because the carrier reported what Cowen & Co. called “better-than-expected” iPhone sales, AT&T Mobility will be faced with paying more in handset subsidies.

“We are lowering estimates for [AT&T] based on our expectations for continuing high subsidies on the iPhone,” the report said.

AT&T Mobility’s parent company is also expected to suffer from higher access line losses and wireline pressure particularly due to price promotions for broadband services, according to the report. Yet, in light of less than optimistic forecast for the carrier, many still see AT&T Mobility remaining on top.

“Despite lowered estimates, we expect [AT&T] to outperform the market based on its current 7% yield,” the Cowen & Co. report said. “We expect the company to raise its dividend again in December.”

Verizon Wireless received the sunniest forecast of all. The carrier is expected to post around 1.4 million net adds boosted by industry-leading churn of 1.2% and the best wireless margins in the industry.

T-Mobile USA Inc. is not expected to match the growth of AT&T Mobility or Verizon Wireless, but the carrier’s recent announcement that it will be launching a Google Inc. Android-powered smartphone later this month could help boost Q4 results.

As for any impact the current economic troubles might have on carrier results, analysts expressed some concern.

“[It’s] probably not going to be that good of a quarter,” Hart said. “This year was slow in general, compared to last year.”

Hart compared the first three quarters, saying that they’re usually pretty equal and that the fourth quarter, near holiday-shopping time, is where carriers see a lot of progress. However, that may not be the case this year.

“Consumer confidence is down,” he said. “They were tightening before, but now they’re really thinking we have to tighten up now. People are more concerned about the economy now than they were a month ago.”

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4 Responses

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1. james
   October 21, 2008 04:30 pm

   Poor Sprint. Looks like Verizon Wireless has gone new subscriber shopping at Sprints-r-us!

   2032890
2. Vendkat
   October 16, 2008 02:09 am

   This is the best joke going around Kansas City…Hey did you hear Sprint Corp is losing a million subscribers per quarter on their two incompatible networks (CDMA, iDEN)?Yes, I heard that.Did you hear how they are going to fix the problem?No.They spent two years trying to launch a THIRD NETWORK (Xohm)!!This joke brings down the house every time among the locals who know how bad the mess is at Sprint Corp.

   2003769
3. KC Wizard
   October 16, 2008 02:09 am

   Not much talent left at Sprint corp anymore. Mostly office politicians and cheap Indian labor. Hence the decline...Xohm is the biggest joke goining. Two years of work and 1 test market launched.

   2003760
4. LMAO
   October 16, 2008 02:09 am

   Still more bad news for the goobers at Sprint corp. Losing millions of subs on their two networks and they cannot even launch a third network.

   2003759

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