2nd Quarter 2008: Wireless Carrier Reports

Re: Verizon Wireless adds 1.5 million in Q2

Now that's weird. Verizon reporting this early before AT&T. LOL!

 

Re: Verizon Wireless adds 1.5 million in Q2

It's probably because they LOST 250k iPhone converts already this quarter.

 

Re: Verizon Wireless adds 1.5 million in Q2

Any links to prove your statement true?

 

Re: Verizon Wireless adds 1.5 million in Q2

Of course not! Experience tells me though that this is to combat the barrage of AT&T/iPhone announcements, although I don't see AT&T's net gain being that great for last quarter with limited iPhone availability and the impending 3G llaunch.

In fact, Engadget has some numbers that suggest (by a stretch) that there aren't many converts at all. Number port stats suggest curious trends in iPhone 3G launch - Engadget Mobile

I personally switched from VZW to AT&T for the iPhone, but I'd rather have the VZW network with ubiquitous EVDO than have faster HSPA in areas where I don't live. I really like the iPhone though.

 

Re: Verizon Wireless adds 1.5 million in Q2

OK, just checking...

The iPhone is nice and all, but certainly not worth ANY carrier losing many customers over. There are a lot of great phones out there from several manufacturers, of which the iPhone is one of.

 

So what's Sprint's excuse?

This coming report for AT&T number's in the 2nd quarter won't show any iPhone 3G gains because it came out on July 11th, which is the 3rd quarter. So we'll have to wait until around Oct. 22nd for those numbers.

 

Wirelessly posted (Mozilla/5.0 (SymbianOS/9.1; U; en-us) AppleWebKit/413 (KHTML, like Gecko) Safari/413 es70)

Nextel?

 

Re: Verizon Wireless adds 1.5 million in Q2

Yes, which means the 2Q numbers will probably be lower than normal. People buying an iPhone will have waited either because they wanted the 3G or couldn't get the 2G. Thats why I had said "impending 3G launch"--it hadn't happened yet in 2Q.

 

Re: Verizon Wireless adds 1.5 million in Q2

Wonder if the numbers will be reversed when the 3Q results come out.

 

Re: Verizon Wireless adds 1.5 million in Q2

I really don't think Verizon will feel it. It didn't happen last year when the first version came out.

It still amazes me, though, how Verizon continues to have great add numbers every quarter. As expensive as they are, I guess a lot of people are happy with them. I know I don't have any complaints.

 

Re: Verizon Wireless adds 1.5 million in Q2

Yeah, that's true. I forgot about that. Wow really, when I had them a couple of years ago, they where just horrible. But, like that saying goes. "You get what you pay for." I guess they're better in those areas then any other carrier. I really wouldn't think they get this many subs added because just about everyone thinks they's a recession going on.

 

AT&T quarterly profit rises on wireless growth

AT&T quarterly profit rises on wireless growth

NEW YORK (Reuters) - Top phone company AT&T Inc (T.N) said on Wednesday its quarterly profit rose, as growth in its wireless subscribers helped to compensate for its shrinking traditional landline business.

Second quarter profit rose to $3.8 billion, or 63 cents a share, from $2.9 billion, or 47 cents a share, a year earlier.

Excluding special items including merger-related costs, profit rose to $4.5 billion, or 76 cents a share, from $4.3 billion, or 70 cents a share, it said.

Quarterly revenue rose 4.7 percent to $30.9 billion.

It also reported a net gain of over 1.3 million in wireless subscribers in the quarter. That was slightly above the average forecast for 1.25 million additions by seven analysts surveyed by Reuters, and little changed from gains in the first quarter.

(Reporting by Ritsuko Ando; Editing by Derek Caney)

 

It's all great marketing and getting people to drink the red Kool-Aid. They also have a great network to back them up.

But then again, Sprint also has a great network and look where they are. So it's not just about having a great network. There was one time when Sprint was gaining the most net customers per quarter, more than Verizon and Cingular. Just go back to 2001 and look at the numbers. They were having net gains just like Verizon and AT&T do today.

 

While these numbers are helping their wireless business, it appears to be doing so at the expense of their wireline business.

AT&T, Verizon Brace for More Wireline Losses

Telecom giants AT&T T and Verizon VZ are set to report second-quarter earnings results in the next week, but eroding wireline margins amid increased competition may overshadow growth in wireless divisions.

With AT&T's second-quarter earnings scheduled for Wednesday and Verizon for next Monday, the struggles of the wireline businesses, which have come under pressure as customers have disconnected home phone lines in favor of wireless connections, should be on full display.

In its first-quarter report, AT&T said total switched access lines fell 7.7% from the year-ago period, worse than many analysts anticipated. In its wireline segment, operating revenue has declined over the previous three quarters, while operating expenses have continued to climb. Adjusted operating margin for the wireline segment slid to 18.5% last quarter from 20.1% in the same quarter a year earlier.

An increase in U-verse video connections was a positive for AT&T in the first quarter, but that gain was offset by a sharp decline in retail consumer primary and additional access lines. Also, retail business access line connections continued to drop, falling 3% over the previous year. Many observers expect the same to show up in the company's second-quarter earnings release.

Verizon's core business also suffered in the first quarter as wireline revenue fell 1.4% from a year ago. Total switched access lines fell more than 8% in the first quarter from a year ago, with a large amount of that pullback coming from the residential segment. Verizon's operating income margin fell to 8.8% in the first quarter from 9.1% in the same period a year earlier.

"Unfortunately, trends in the wireline [segment] are nothing short of dismal," writes Craig Moffett, an analyst with Sanford Bernstein, in a research note. "As telco performance erodes, margin expectations for the whole wireline business will need to come down, in our view. Access line losses are accelerating. The rate of incremental broadband penetration is slowing. [Average revenue per subscriber] growth is therefore decelerating."

Fear over what Verizon and AT&T will say about wireline losses has prompted analysts to cut estimates for their second-quarter profit, especially given current macroeconomic conditions. According to Thomson Reuters, analysts have reduced estimates for earnings per share and revenue for both companies over the last month.

Credit Suisse analyst Chris Larsen is among those ratcheting back estimates, citing the weakening macroeconomic environment and more aggressive wireless competition.

"We believe these factors drove greater wireless and technology substitution than we had anticipated," Larsen writes in an earnings preview. He expects total access line losses to be 7.9% year-over-year at AT&T and 8.6% at Verizon, adding that loss rates for both may not improve to 2007 levels "until mid-2010."

However, Moffett notes two important differences emerging from state-by-state trends at AT&T relative to Verizon. "Access line declines at AT&T have been somewhat less severe," he says. "Access line declines at AT&T have, at least thus far, had a much less severe impact on margins."

On the positive side, the average revenue per subscriber, or ARPU, has been rising each quarter, which Moffett attributes to increased broadband penetration and price hikes. In the first quarter, Verizon said that wireline consumer ARPU rose nearly 10%, with FiOS service ARPU of $129. In the same quarter, AT&T's average revenue per primary line rose 5.4%, an increase that was "driven by growth in broadband and bundled video," the company said.

"These ARPU gains have created a non-linear 'threshold' effect, where moderate access line losses like those in the Southeast can be offset by rising ARPUs, but steeper access line losses like those felt in the Northeast cannot," writes Moffett. "The emerging video businesses at Verizon and AT&T are helping ARPU, but may be worsening margin declines. Expanded video footprints will likely put further pressure on margins."

On the positive side, wireless results from both Verizon and AT&T should be strong in the second quarter, although analysts are turning more cautious with their outlooks for the balance of the year. While both companies have feasted on Sprint Nextel's S subscriber base, the embattled carrier has lately shown signs of a turnaround.

"An improvement in Sprint could put more pressure on Verizon's net ad share, [and] increased wireless pricing competition could hurt margins," writes Larsen. "Sprint should improve its competitiveness in 2008, which combined with slower industry growth should significantly reduce subscriber growth at the other carriers, particularly AT&T and Verizon."

Additionally, with wireless penetration above 80% in the U.S., there is a limited pool of new subscribers for AT&T and Verizon to compete for. With AT&T unveiling a lower-priced Apple AAPL iPhone 3G in the quarter, Verizon could be faced with slower wireless growth.

"While the first-generation iPhone had a limited effect on Verizon's net adds, the lower price point and potentially broader appeal of the 3G iPhone could be a larger competitive threat," Larsen adds.

The main focus of the earnings reports from Verizon and AT&T, though, will be that access line losses are showing no sign of relenting. "Neither the maturation of the cable VoIP threat nor the broad deployment of fiber is having a discernible impact on the rate at which the access line base is eroding," Moffett says.

 

Re: AT&T quarterly profit rises on wireless growth

So at the moment, it looks like this:

AT&T - 72.7 million subscribers
VZW - 68.7 million subscribers

 

That's right. Sprint led the industry for 14 consecutive quarters 1999-2002. And they did it with a much smaller and less reliable network than they have today.

 

True but what I meant was Sprint's was smaller and less reliable than the others back then but they still managed to beat the competition in subscriber growth. Now they have closed the coverage and reliability gap and have free roaming (which they didn't back then) but yet have fallen way behind the others. This goes to show that network coverage isn't the main reason people choose a carrier.

 

I thought during that time Sprint had the largest native network, and that the other major providers had to use affiliates and roaming agreements. What was the time period that Sprint's advertising campaign touted it? Or was it just the largest "PCS" network?

 

Sprint was back then much like Verizon is today: great advertising and people were buying it. Remember those days when choosing either Cingular, Verizon or AT&T Wireless meant you had to choose a small regional area? Outside that you were roaming and paying hefty fees. With Sprint, you had their national "PCS network" which they advertised as 100% digital "built from the ground up." That was great advertising back then because it made other carriers look outdated and smaller. People bought Sprint for the sound quality of its "100% Digital 100% PCS network". That was a big buzzword back then, much like Verizon now hails their network.

Soon after that the competition realized that "going national" was the wave of the future and each started coming out with affordable national plans: America's Choice, GSM America, Cingular Nation..... Good'ol times!

 

I remember Sprint's commercials back then, and I agree with you on this, bobo. It was in 2000 when Cingular and Verizon (as we know them now) came into being. So it's true Sprint could tout then what no other carrier really could.

Even so, that was quite a streak of success for Sprint.

 

when is sprints #'s coming out? and TMOB? i have a feeling TMOB has fell some since last quarter and Sprint has came back.

With their new pricing plans, Sprint is now "the best bang for the buck", and price sensitive consumers that generally run for TMOB stores have likely shifted gears towards Sprint stores i have a feeling.

Also i think TMOB is spinning its wheels with some of its new attempts to attract customers (TMOB at home is not selling well and their 3G not coming together is really leaving them in the dust).

Just a couple observations.

 

Sprint is going to report on August 6th and the parent company of Tmobile, Deutsche Telekom is reporting the day after. I really don't pay attention to their numbers as I have some stock with AT&T, but I might sell, don't know yet.

 

Sprint Nextel Reports Second Quarter 2008 Results
Stable post-paid ARPU, driven by the success of Simply Everything(TM) with high value customers, and lower operating expense drive $87 million sequential improvement to Consolidated Adjusted OIBDA* of $2.1 billion

• Post-paid churn improves more than 45 basis points from 1Q
  '08, to below 2.0%
• Sprint's Now Network(TM) supports continued innovation through
  launches of the Instinct(TM) by Samsung, Nextel Direct Connect
  on CDMA, and the BlackBerry Curve(TM)
• Year-to-date Free Cash Flow* of $181 million; total liquidity of $4.7 billion

The company's second quarter earnings conference call will be held at 11 am EST today. Participants may dial 866-297-0891 in the US or Canada and provide the following ID 55380725 or may listen via the Internet at Sprint Nextel Corporation - Investor Relations - Investor Relations. OVERLAND PARK, Kan.--(BUSINESS WIRE)--Aug. 6, 2008--Sprint Nextel Corp. (NYSE: S) today reported second quarter 2008 financial results which included consolidated net operating revenues of $9.1 billion and a diluted loss per share of 12 cents. Adjusted EPS before Amortization*, which removes the effects of special items and non-cash amortization expense, was 6 cents per share. The company reported cash flow from operating activities of $1.1 billion and a cash position of approximately $3.5 billion in the quarter.
"We are seeing signs of progress from our efforts to improve the customer experience, rebuild the Sprint brand and increase our profitability," said Dan Hesse, Sprint Nextel CEO. "Our company-wide retention efforts, which include Simply Everything(TM) plans, our Now Network(TM) campaign and the launch of the Instinct(TM) handset are proving to be effective retention tools, particularly for high-value customers, and this is beginning to have positive impacts on churn and ARPU. Our sequential improvement in post-paid churn is the best reported by any national wireless carrier since 2004, and it equals Sprint's best-ever churn performance post-merger.
"To increase profitability, we are taking a more aggressive stance on reducing costs, including a more stringent spending review process, minimizing external labor costs, and we have streamlined our distribution channels by more than 25% since the beginning of 2008. Further, our disciplined customer credit and collections efforts have reduced bad debt and strengthened the credit profile of our customer base," Hesse said.

Wireless Customers

• The company served 51.9 million customers at the end of the
  period, compared to 54.0 million at the end of the second quarter of 2007. The company's mix of prime customers improved sequentially and year-over-year for new customers and the
  post-paid base.
• For the quarter, total wireless customers declined by 901,000, including losses of 776,000 post-paid customers and 250,000 traditional prepaid users, partially offset by gains of 112,000 Boost Unlimited customers and a 13,000 increase in the number of wholesale and affiliate subscribers.
• At the end of the second quarter, the company served 38.9 million post-paid subscribers, 4.2 million prepaid subscribers and 8.7 million wholesale and affiliate subscribers.
• Subscribers by network platform include 35.5 million on CDMA, 14.6 million on iDEN and 1.7 million PowerSource(TM) users who
  utilize both networks.
• In the second quarter, the company added to its device and
  service capabilities with the launch of the Instinct(TM), the nationwide introduction of four Nextel Direct Connect handsets on CDMA using the EVDO-Rev A network, and the Blackberry
  Curve(TM). The company also simplified its service pricing and completed its conversion of post-paid subscribers to a new unified billing platform.

Wireless Churn

• Wireless post-paid churn of just under 2.0% improved by over 45 basis points sequentially and was in line with the year-ago period. The improvement reflects a sequential decline in the number of deactivations among both CDMA and iDEN subscribers.
• The company reported significant sequential improvements to voluntary and involuntary churn, while the year-over-year metrics were unchanged. Involuntary churn benefited from a
  better credit mix and seasonality. Voluntary churn benefited from the company-wide focus on improving the customer experience, retention initiatives, strong customer response to
  Simply Everything(TM) and better performance in customer care.
• For the quarter, the churn rate for CDMA subscribers was slightly below the average post-paid churn rate and iDEN was modestly higher.
• Boost churn in the second quarter was 7.4%, compared to 9.9%
  in the first quarter of 2008 due to lower churn for traditional Boost pay-as-you-go subscribers, slightly offset by higher churn for Boost Unlimited.

Wireless Revenues
Wireless service revenues of $7.0 billion declined 11% year-over-year and 2% sequentially. The year-over-year decline was due to lower ARPU and fewer subscribers, while the sequential decline was due to fewer wireless subscribers. Wholesale, affiliate, and other service revenues were flat sequentially and were down compared to the year-ago period due to the mix of wholesale customers.

• Wireless post-paid ARPU in the quarter was stable at $56 as compared to the first quarter 2008 due to improved retention of higher revenue subscribers and a more favorable impact from rate plan migrations. Wireless post-paid ARPU declined by 7% compared to the year-ago period reflecting continued pressure on access and overage revenues, partially offset by data revenue growth. CDMA ARPU was slightly higher than the post-paid average, while iDEN ARPU was modestly lower.
• Data revenues contributed more than $12 to overall post-paid ARPU in the second quarter, led by growth in CDMA data ARPU. CDMA data ARPU increased nearly $1 from the first quarter, to more than $15, and now accounts for approximately 27% of total CDMA ARPU. The increase was driven by strong take rates on bundled data services, such as those included with Simply Everything(TM), as well as continued growth in data cards.
• Prepaid ARPU in the quarter was approximately $30 compared to $31 in the year-ago period and $29 in the first quarter of 2008. The sequential increase reflects a growing contribution from Boost Unlimited subscribers, while ARPU of traditional prepaid users did not change significantly from first quarter levels.
• Wireless equipment revenues of $479 million declined on a sequential and year-over-year basis primarily due to lower handset sales volumes and increases in rebates.

Wireless Operating Expenses and Adjusted OIBDA*

• In the second quarter, total operating expenses were $7.9 billion for the Wireless segment after normalizing for special items, compared to $8.3 billion in the year-ago period and $8.2 billion in the first quarter of 2008.
• Adjusted OIBDA* of $1.9 billion in the quarter compares to $2.7 billion in the second quarter of 2007 and $1.8 billion in the first quarter. The year-over-year decline in Adjusted OIBDA* is due to lower ARPU and wireless subscribers, while the sequential increase was due to lower SG&A expense.
• Cost of services increased 3% year-over-year and 4% sequentially. The year-over-year change reflects increased
  costs related to off-network roaming traffic, increased service and repair costs, and a larger base of cell sites. These increases were partially offset by lower employee-related costs and lower variable access costs. The sequential increase is mainly due to higher roaming and
  service and repair costs.
• Cost of products was 6% below the year-ago quarter and
  declined 7% sequentially due to lower volumes, partially offset by a greater share of higher-cost PDA devices.
• SG&A expenses declined 8% from the second quarter of 2007 and 11% from the first quarter of 2008. The year-over-year improvement is due to lower selling, marketing, bad debt and labor expenses, offset by increased spending on customer care. On a sequential basis, all of these expense categories declined.
• During the quarter, the company closed 50 less-profitable direct retail stores and reduced the number of indirect
  dealers by more than 25%, targeting dealers with low productivity and high churn.

 

Not as good as many hoped with a loss of 900k customers. The 2.0% churn is low for Sprint-Nextel, but not for the industry, and will probably take a hit next quarter with the elimination of SERO. ARPU should go up, but I think it will for the whole industry.

Tomorrow's T-Mobile numbers should be interesting.

 

I was surprised when I saw the numbers this morning, I had to read it twice. But its like Dan Hesse said, its going to take multiple quarters for them to turn it around. Can't wait for Tmobile's numbers though, they may add more subs than people think because of the slow down in the economy and they're a lot cheaper than the other major carriers. I'm really thinking that Sprint's going to lose more subs next quarter because of the elimination of the SERO plan like spleck said and the introduction of the cap.

 

Nobody should be surprised at the Sprint numbers for this quarter. Sprint themselves said they would lose about that many this quarter when they reported last quarter. But the rising ARPU means better quality customers are starting to come in and the lower churn rate is a very positive sign. IMO