Wireless carrier Q2 preview: Bounce back for Verizon; Sprint woes continue

The domestic wireless market was at this point expected to see a slowdown in customer growth as the overall market hit saturation. However, consumer appetite for mobile services has allowed operators to continue posting robust growth figures as sales of secondary devices like tablets and wireless modems has surged.
This trend is expected to continue this week as wireless operators begin posting second-quarter financial results that analyst predict will show strong growth for most operators.
Verizon Wireless laid its cards on the table early with Verizon Communications CEO Lowell McAdam saying the carrier was set to announce 1.4 million postpaid net additions for the quarter. That result would be a 40% increase compared with the second quarter of last year and somewhat reverse modest growth posted during the first quarter of this year.
McAdam’s comments seemed to indicate that Verizon Wireless’ aggressive pricing moves during the quarter paid off, with the carrier both matching AT&T Mobility’s successful four-line family plan offer (unlimited talk, messaging and 10 gigabytes of data for $160 per month), and a less-expensive, bring-your-own-device option for its More Everything rate plans.
AT&T Mobility is also set to post strong customer numbers, with the company already reporting that it expects to post around 800,000 net postpaid customer additions for the second quarter. That result builds on a surprisingly strong first quarter in which the carrier reported a year-over-year doubling of its postpaid net additions to 625,000 new subscribers, and which was its strongest first quarter result in five years.
The prepaid side could be of more interest for AT&T as during the quarter the carrier re-launched its no-contract efforts behind the Cricket brand that it acquired when it purchased Leap Wireless. Those re-branding efforts included rolling in AT&T Mobility’s previous Aio Wireless brand, which saw its autonomy snuffed out after one short year.
The biggest drop is expected at T-Mobile US, where analysts predict the carrier could see postpaid net customer additions fall from 1.3 million subscribers during the first quarter to around 750,000 net customer additions for the second quarter. While that is still a strong result, it would appear to be a bit of a letdown from a carrier that has surprised its larger rivals over the past year.
Unlike the first quarter when T-Mobile US unveiled an “un-carrier” initiative that has the carrier paying early termination fees for those subscribers coming from rival operators, the second quarter has been a bit quieter from the magenta operator. The carrier did announce marketing initiatives based around tablet pricing and a new capped data rate plan, but those offerings are not expected to have quite the impact as putting cold, hard cash on the table.
In reporting its first quarter results, T-Mobile US noted that it expected between 2.8 million and 3.3 million postpaid net customer additions for the year, which hinted at the potential for slower growth throughout the rest of the year. If the carrier does manage to hit the 750,000 postpaid net customer additions expected by analysts, that would leave around one million postpaid net additions expected to be added through the second half of the year.
One constant expected for the second quarter is continued struggles from Sprint. The carrier is coming off a quarter in which it lost nearly all of the customers it managed to add during the final three months of last year, with expectations that Sprint will again post net losses for the second quarter. Wells Fargo Securities senior analyst Jennifer Fritzsche may have summed it up best by stating: “We expect [Sprint] to be the ‘gift giving carrier’ in Q2 given the solid previews by [AT&T] and [Verizon].”
Sprint has already prepped the market for what could be another disappointing quarter, having previously stated that it expects any customer growth is not likely until at least the second half of this year as it works its way through numerous network programs.
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