The two big telecom companies that are likely to be the victors in the first-quarter race to rack up new subscribers and retain the existing ones are T-Mobile US and AT&T Mobility. The forecast appears so as churn has shaped up as a key area of focus in the industry, confirms a research report from analysts at investment bank Jefferies.
The Jefferies analysts have also added in a research note that these carriers are ting subscribers at rates that aren’t very different from their historical averages. However, they do seem to believe that churn will be a crucial metric to be observed in this quarter as T-Mobile and AT&T have been showcasing better-than-expected trends recently and Sprint and Verizon Wireless are likely to report slightly higher churn.
Earlier this month, AT&T said that it hopes to add around 400,000 postpaid customers in the first quarter, which would show up as weaker performance than what they had a year ago. Yet, the carrier also expects to see improvements in its postpaid churn. AT&T said that its postpaid churn is moving lower on both a year-over-year as well as a sequential basis. The carrier’s postpaid churn in the first quarter of 2014 was 1.07 percent and 1.22 percent in the fourth quarter of the same year.
To the Jefferies analysts, AT&T appears to have gone ahead with a less aggressive stance in 1Q, seemingly preferring profitability and free cash flow to incremental market share.
As far as Sprint is concerned, the analysts seem to forecast the company to lose 355,000 subscribers during the first quarter “as the initial shock of last quarter’s promotions wears off.” Ever since Sprint launched the aggressive “Cut Your Bill in Half!” program in December targeting Verizon and AT&T, the analysts noted, both Verizon and T-Mobile have introduced competing offers. Verizon now offers two lines and 6 GB of data for $100, while T-Mobile offers two lines and unlimited data for the same amount.
The analysts also expect Verizon will go ahead adding only 711,000 postpaid customers within the first quarter, below the consensus forecast of 752,000. As per theses analysts, Verizon’s average revenue per account will fall 0.9 percent, which is worse than Wall Street’s expected 0.4 percent decline.
In a strategy to attract more new customers and regain market share, Sprint has openly announced that it will reimburse the costs for a customer if they make the switch to Sprint The cost coverage will include their Early Termination Fees (ETFs) and any remaining payments regarding equipment instalment plans, regardless of the outstanding amounts customers have to pay.
As per the telecom biggie, customers who are willing to switch will need to trade in their phone to Sprint from their current carrier in case they owe an ETF or EIP balance amount. Post that, customers will need to activate a Sprint device on Sprint Easy Pay, the carrier’s iPhone for Life Plan, Sprint Lease or pay full retail price providing a new line of service, subject to credit approval. Customers also need to successfully fill out an online registration form at the telecom company’s website and upload a bill proving any applicable charges that need to be reimbursed within 60 days of getting their new phone activated.
Sprint will disburse the amount covering the costs of switching through an American Express Reward Card. The telecom giant will also refund the switching costs within 15 days of the customer successfully filling out the online registration and providing a bill that shows the early termination charge or amount due as device balance.
Sprint spokeswoman Kristin Wallace has confirmed and also clarified that the new offer from of the company is a limited-time deal. However, the company has not yet decided on a termination date for said offer.
Sprint is still offering to cut the service bill in half for those customers who switch from companies like AT&T Mobility and Verizon Wireless. Various Sprint executives have also confirmed the fact that when prospective customers from Verizon and AT&T apply for services from Sprint, they often find plans to be quite a bit cheaper than their bills would be if they were just cut in half. Sprint earlier thought of ending that offer way back in January. However, it decided to go on through all of 2015. As such, it is likely that the company does the same for the new offer as well.
We often hear people complaining about how they find that the landlines at their homes are simply unjustified expenses. Most households feel they are not using the landlines at their homes adequately enough and that’s primarily because they all use cellphones more than ever. Yet, there are those who still have complete faith in the power of this old school but reliable device.
There are a number of data companies across USA that are consistently working to promote the use of landlines owing to the benefits of the hard wired communications option. The company is sharing mail pamphlets bearing the title “Miss having a clear connection?” The truth as we all know it is that at one point or the other, we all have faced the troubles that come with unclear conversations, poor signals, and a dying battery while using cellphones. But home phones don’t do that to you, no matter how long you use them. And that’s because they do not boast of a wireless network. That’s also why we love the wired device. It has a clarity that is unparalleled and connectivity that is dependable!
Land line telephones form a critical resource for businesses. Lately, the use of telephone for business communication may have dipped a bit owing to greater use of computers and the internet. Yet, landline telephones are still rated better than cellphones as far as communication and satisfaction is concerned. A major reason for this is that business set ups largely depend upon landline connections so as to establish user identification, have clearer communication that does not get interrupted by low signals, and have a lasting reliability on a device that does not need charging.
Nowadays, landlines have even more sophisticated features such as the teleconferencing ability that has helped many businesses overcome the challenges of long distance business communication or conferences. It brings people together from all over the organization at a fraction of the cost of travel and meeting facilities. When used along with video conferencing, conference calls bring an essence of face-to-face meeting to the meeting as live presentations are watched, questions are circulated and answers are discussed among a large group of people attending the call.
Providing services to millions of people and ruling the telecom sector of one of the most competitive and dynamic countries of the world, these are companies that have topped the charts as strong U.S. carriers of 2014. In an interesting and eventful year for the U.S. carriers, the race paced up with intense competition and aggressive price wars among major players.
Among the stronger U.S. carriers, Verizon, who is also the market leader in the telecom sector, generated the highest revenue from wireless services in the first three quarters owing to its large postpaid subscriber base and higher plan charges than its other competitors. Verizon can certainly manage to charge more for its services because of its network quality and wide 4G LTE and enhanced LTE coverage. Its LTE network covers about 500 locations, while XLTE has been launched in over 400 cities across the country. Verizon’s XLTE has the potential to be twice as fast as its existing 4G network, however, that depends on the user location. T-Mobile, in the man time, took the lead in the top line growth. Pushing its wireless revenues that grew over 21% year-over-year in the ninth period ending September 2014, it proudly boasted of robust postpaid subscriber gains (6.2 million). Sprint chased its competing carriers because of its declining user base and low ARPU (Average Revenue per User).
As far as EBITDA and EBITDA margins are concerned, Verizon yet again led its peers owing to its higher-margin plan offerings, bounded marketing expenses and lower proportion of customers opting for no-subsidy plans. Both Sprint and T-Mobile seem to be left behind the market leaders owing to their high marketing expenses and more humble service revenues. Although T-Mobile’s service revenues and margins have improved over the last few quarters, Sprint is supposed to face downward pressure in the near future based on its declining postpaid subscriber base and heightened competition.
In 2013, T-Mobile assumed control of MetroPCS and Sprint assumed control of Clearwire, after which AT&T closed its acquisition of Leap Wireless in 2014. Also, Cincinnati Bell announced its intention to slip out of the wireless business, and no longer exists on this list. Finally, Shentel has been added to this list as nTelos exits its Eastern markets.
While the fourth-quarter reporting period comes to a close, it’s time to start analyzing the information to spot out the carriers that slipped and those which managed to get ahead.