Verizon and AT&T Reviewed: The Pros and Cons of Rising Smartphones Sales
LONDON, January 24, 2013 /PRNewswire/ –
The increasing demand for smartphones has helped U.S. telecom services providers such
as Verizon Communications Inc. (NYSE: VZ) and AT&T Inc. (NYSE: T) post strong top-line
growth in the recent past. However, increasing smartphone subsidies are also hurting
profit margin at wireless carriers. StockCall has posted free reports on Verizon
Communications and AT&T which can be accessed by registering at
Verizon Communications’ Wireless Division Posts Strong Growth in Revenue and Customers
On Tuesday, Verizon Communications Inc. reported its fourth quarter financial results.
While the company posted a loss for the quarter on a consolidated basis, its wireless
division reported strong growth in revenue and customers. See our full report on Verizon
by signing up free of charge at http://www.StockCall.com/VZ012413.pdf
Verizon Wireless, a division of the company, reported total revenue of $20 billion in
the fourth quarter, up 9.5% on a year-over-year basis. Retail postpaid ARPA (average
revenue per account) rose 6.6% to $146.80 per month in the quarter.
During the fourth quarter, Verizon Wireless added 2.2 million net retail connections,
which included a record-high 2.1 million retail postpaid net connections. At a technology
conference earlier this month, Lowell C. McAdam, CEO of Verizon Communications, said that
out of 2.1 million contract customers the company signed in the fourth quarter of 2012,
85% bought a smartphone. In fact, smartphones accounted for over 58% of Verizon Wireless’
retail postpaid customer-base at the end of 2012.
While record smartphone sales boosted Verizon’s overall revenue, they hurt the
company’s profit margins as the smartphone sales come with substantial subsidies. In the
fourth quarter of 2012, Verizon Communications reported a loss of $1.48 per share on a
consolidated basis, up from $0.71 per share reported for the same period in the previous
year. Excluding one-time items and the impact of Superstorm Sandy, Verizon’s earnings for
the quarter were $0.45 per share. Consolidated operating revenue for the quarter was
$30.05 billion, up from $28.44 billion reported in the fourth quarter of 2011.
AT&T Results Eyed
Verizon’s rival AT&T Inc. [Free Technical Analysis Report on T
[http://www.stockcall.com/T012413.pdf ]]  will release its quarterly results on Today,
January 24, 2013 and figures were not available at the time this article was finalized.
Earlier this month, AT&T had announced record smartphone sales for the fourth quarter. The
Dallas, Texas-based company said that it sold over 10 million smartphones in the fourth
quarter, which included best-ever quarterly sales of Android and Apple smartphones.
Ralph de la Vega, President and CEO of AT&T Mobility, noted that the company had
another incredible quarter of smartphone sales as the mobile Internet continues to drive
strong growth in wireless.
Given the strong smartphone sales in the fourth quarter, it will be interesting to see
how much of an impact smartphone subsidies had on AT&T’s bottom-line in the fourth
Long-Term Benefits of Smartphone Subsidies
While hefty subsidies are hurting profit margins of telecom service providers in the
U.S., the strategy is likely benefit in the long-term. According to AT&T’s Vega,
smartphone subscribers are the industry’s most valuable postpaid subscribers with average
revenues twice that of non-smartphone subscribers. No surprise then that both Verizon and
AT&T, the two biggest wireless carriers in the U.S., are going all-out to gain more
Verizon and AT&T Remain Dominant Players
Verizon and AT&T have been the dominant players in the wireless market in the U.S.
over the years. The trend is likely to continue in the next few years as both companies
are well ahead of other wireless carriers in LTE (long-term evolution).
1) AT&T Inc. Technical Analysis [ http://www.StockCall.com/AT&TInc012413.pdf ]
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