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Wells Fargo: T-Mobile Only Major Network To Register Postpaid Net Phone Gains In 1st Quarter

Wells Fargo: T-Mobile Only Major Network To Register Postpaid Net Phone Gains In 1st Quarter

According to analysts of Wells Fargo Securities, T-Mobile is looking to be the only major US wireless carrier to post some growth in postpaid net phone additions during the first quarter of this year. Wells Fargo predicts that the third biggest wireless carrier in the United States will register 1.4 million net new users, marking a 12th straight quarter in which it managed over 1 million net additions.

 

T-Mobile is also expected to show the best subscription growth among the major wireless carriers in America, with a projected 960,000 postpaid net additions that include 768,0000 handsets and 440,000 prepaid net gains. But Wells Fargo is quick to note that the wireless carrier will fail to register a 4th straight quarter of over 2 million overall net additions. 

 

Moreover, the firm also expects the wireless carrier to post postpaid phone churn of 1.3 percent, which has remained flat compared to last year’s customer turnover rate and has decreased 16 basis points sequentially. Wells Fargo analysts also made special mention of T-Mobile’s unusual strategy of launching aggressive promotional campaigns during the first six months of the year, a time considered by the industry as generally slow in light of the recently concluded holiday season. 

 

In March of this year, Wells Fargo had downgraded its earnings before interest, taxes, depreciation and amortization (EBITDA) projections for T-Mobile to $1.99 billion. This figure is just a bit less than consensus predictions amounting to $2.01 billion. Furthermore, the wireless carrier’s revenues are expected to increase, with Wells Fargo’s estimates of $6.61 billion to grow 13.6 percent year over year. And because T-Mobile has showed signs that it is prioritizing equipment installment plan over leasing in the first six months of this year, Wells Fargo predicts that only the company will post only 441,000 new leased device activations in the first quarter of 2016.

 

T-Mobile may be showing continuous growth with regards to its subscriber base and revenues, but other wireless carriers are opting to put more emphasis on profits rather than market share. AT&T, for instance, is projected to register service revenues of $14.9 billion, marking the first time since the first quarter of 2014 that it has shown growth in revenues. However, AT&T is expected to post net handset losses of 200,000. Sprint meanwhile is expected to post 75,000 net postpaid phone losses, but will register growth in wireless service revenues. As for industry leader Verizon Wireless, it is projected to register 120,000 net postpaid phone losses and a total revenue margin of 44.5 percent, which is an improvement from the 38.4 percent before.

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