Following years of steady decline, the wireless industry looks to have turned the corner during the past several quarters in posting year-over-year gains in customer growth. That turnaround was highlighted by a 76-percent year-over-year improvement in customer additions during the third quarter of 2003 compared with a 48-percent decline in the third quarter of 2002.
Most analysts note that several factors-including improvements in customer churn and the industry’s ability to target under-penetrated and perhaps more risky, market segments-have contributed to the turnaround.
The trend is expected to continue to a lesser extent during the recently completed fourth quarter, with analysts predicting the industry will post strong customer growth compared with the fourth quarter of 2002, despite 2003’s local number portability wild card. Most industry observers expect that LNP has had little effect on overall customer growth.
Analysts are predicting the industry will have added approximately 5.5 million customers during the fourth quarter, which would be one of the strongest quarters of the past several years and a significant improvement from the approximately 4.4 million subscribers the industry added during the fourth quarter of 2002.
Verizon Wireless again is expected to lead the industry in customer growth. Analysts predict the nation’s largest wireless carrier added approximately 1.5 million subscribers during the last three months of 2003, which would be a 55-percent year-over-year improvement compared with the 964,000 subscribers the carrier added during the fourth quarter of 2002.
Verizon Wireless has led the industry in customer growth since the second quarter of ’03, and if it meets fourth-quarter estimates, would post a 92-percent year-over-year improvement to 5 million customer additions during all of last year.
Cingular Wireless L.L.C. and T-Mobile USA Inc. are expected to battle it out for distant runner-up honors, as analysts forecast the carriers added around 800,000 customers each during the fourth quarter.
The results would be a considerable improvement for Cingular, which reported a loss of 121,000 subscribers during the fourth quarter of 2002, and continue the higher-than-expected customer growth the carrier has posted during the past several quarters. If Cingular meets fourth-quarter expectations, the carrier would post a more than 500-percent improvement in full-year customer growth compared with 2002, at around 2.2 million new subscribers.
On the other hand, T-Mobile USA is expected to report slower fourth-quarter growth following the industry-leading 1 million net subscriber additions the carrier posted during the fourth quarter of 2002. Analysts noted the expected decline in customer additions is partly attributed to the continued higher-than-normal expiration of one-year contracts following the carrier’s successful launches in California and Nevada during the summer of 2002 as part of its network-sharing agreement with Cingular.
Nextel Communications Inc.’s steady growth trend during the past several years is expected to continue during the fourth quarter with analysts predicting Nextel to add between 500,000 and 600,000 subscribers. The forecast growth would put Nextel’s full-year growth at between 2.2 million and 2.3 million customers, which would mesh well with the carrier’s recently updated full-year guidance of between 2.1 million and 2.2 million net customer additions.
Once the industry benchmark for customer additions, analysts expect Sprint PCS to report modest customer growth during the fourth quarter, with estimates ranging from 350,000 to 550,000 net subscribers. Sprint PCS has failed to top the more than the 371,000 customers it added during the fourth quarter of 2002. The carrier largely relied on sub-prime-customers to fuel its high-growth quarters in late 2001 and early 2002.
The wild card appears to be AT&T Wireless Services Inc. Analyst estimates ranged from just more than 100,000 up to 500,000 net customers were added in the fourth quarter. Clouding the crystal ball are different opinions on what impact software glitches that slowed AT&T Wireless’ ability to add customers to its GSM network in November and LNP-related issues had on AT&T Wireless’ customer growth.
A number of analyst firms downgraded their growth estimates following the software glitch, which reportedly lasted through most of November and led into the initial phases of LNP, though the carrier appeared to have made a steady comeback in late December with aggressive handset and rate-plan incentives.
