Wireless Brings Good News to Carriers

Carl Weinschenk
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Increase in Data-Hungry Devices Set to Be Most Disruptive Force in Wireless Industry

First quarter results for AT&T, Verizon Wireless and Sprint-Nextel show that wireless and mobility still are the hottest areas of telecom and that the iPhone remains the device that stirs the drink.

Morningstar reports that AT&T's first quarter results showed wireless margins of 41.6 percent, which was almost 13 percent higher than the previous quarter. The results show, according to the post, that AT&T is more dependent upon the iPhone than Verizon Wireless. That makes sense, since it was the exclusive provider of the device until relatively recently.

AT&T added 187,000 postpaid wireless subscribers during the quarter and didn't suffer mass defections, a fear as the iPhone became available on other carriers. Overall, wireless growth accelerated 4.3 percent year over year, the post said.

The news wasn't as rosy at Verizon Wireless, according to a Dow Jones story posted at Fox Business. It added 501,000 contract customers. That seems like a healthy number - until it is noted that the additions were down 58 percent from the last quarter of 2011. iPhone sales fell from 3.2 million to 1.1 million over the period.

Sprint-Nextel reported on its first quarter. Barrons reported that the carrier had "revenue ever so slight ahead of consensus and a net loss per share not nearly as bad as analysts expected." The piece reported the key numbers:

Analysts had been modeling $8.7 billion and a net loss of 41 cents. Sprint added 1.08 million wireless customers, including 263,000 post-paid subscribers, for a total of 56 million customers. The company's churn rate rose to 2.01% for post-paid subscribers from 1.99% in Q4 and 1.8% a year earlier, mostly because Sprint cut people off for bad credit.

Apple Insider added that 60 percent of the new customers - approximately 660,000 - bought iPhones. Bloomberg reported a classic good news/bad news scenario. The bad: Sprint lost 29 cents per share, almost double the year-ago quarter's 29 cents. The good: That was better than analysts' estimates of 41 cents.

Sprint, which has reported five straight annual losses, boosted contract customers' average monthly bills 6.6 percent from a year earlier to $59.88 as users spent more on smartphone data plans. The carrier's addition of the Apple Inc. (AAPL) iPhone last year is helping it regain some ground lost to larger rivals Verizon Wireless and AT&T Inc. (T), which posted rising sales and earnings this month.

The story quotes Macquarie Capital USA analyst Kevin Smithen. The results "exceeded all estimates" and were "easily the most impressive quarter of the three telcos that have reported to date."

All three results pivoted, to a greater or lesser degree, on the Apple iPhone. It is no coincidence, then, that Apple itself had a great quarter. In general, the results suggest a gradually improving mobile landscape. That trajectory should continue as long as the economy's slow improvement stays on track and the public's infatuation with all-things Apple continues. Bring-your-own-device (BYOD) and other trends that erode the line between business and consumer services will help by encouraging more use of higher price devices.

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