The fourth quarter looks to have been a case of the big wireless carriers getting bigger as both Verizon Wireless and AT&T Mobility announced limited Q4 results that hint at large gains by the nation’s two largest operators.
At an investor conference this week, Verizon Wireless reported that it added 2.1 million direct postpaid net customer additions during the final three months of 2012, which it noted was its best Q4 in company history. In addition to the strong customer growth, Verizon Communications CEO Lowell McAdam added that 85% of devices sold by the carrier during the quarter were smartphones, which should help drive growth in average revenue per user.
All was not sunshine and lollipops for the company however, as it reported plans to take a one-time charge of up to $10 billion during the quarter to account for damage from Hurricane Sandy, restructuring of long-term debt and a charge for employee pensions.
While Verizon Wireless was accumulating high-value postpaid customers, AT&T Mobility reported that it had sold more than 10 million smartphones during the fourth quarter, which was a company record. While the carrier made no mention of customer growth, the strong smartphone sales should also help bolster the carrier’s revenue per line for those handsets that were upgrades from feature phones.
Analysts noted that a potential downside to the strong smartphone sales by both operators could be a hit to operating margins as smartphones typically require a greater upfront device subsidy. Verizon Communications noted in a Securities and Exchange Commission filing that it expected a near-term impact on wireless margins “which will be greater than the sequential decline from fourth quarter 2011, and a consequent negative impact on earnings per share.”
Verizon Communications’ stock (VZ) was trading down nearly 3% early Tuesday, while AT&T’s stock (T) was trading down a similar percentage following the news.
Both carriers are scheduled to announce fourth quarter and full-year 2012 results later this month.
The strong numbers were in stark contrast to those posted by smaller rival MetroPCS this week, which announced it lost 93,200 customers during the quarter, driven by lower than expected gross customer additions that offset slightly improved churn results.
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