Tag Archives: tmus

Upgrade Trend Good For Verizon, AT&T Until iPhone 7 Refresh: UBS

Wireless trends point to strong first-quarter profits at AT&T ( T ) and Verizon Communications ( VZ ), says UBS, though Apple ’s ( AAPL ) expected launch of the iPhone 7 in the fall looms as a wild card for phone upgrades. UBS analyst John Hodulik says the phasing out of wireless contracts at AT&T and Verizon, along with the shift to monthly installment plans for mobile phone purchases, has boosted profits. The EIP (equipment installment plans) boost earnings by booking equipment revenue on the date of sale, though monthly payments may continue for 20 months or more. Neither AT&T or Verizon offer phone leasing plans, though T-Mobile US ( TMUS ) and Sprint ( S ) do. Less aggressive marketing by Sprint in early 2016 also bodes well for the wireless industry, said Hodulik in a report. “We believe Sprint’s recent commentary regarding its focus on free cash flow generation and subscriber stability, combined with our outlook for fewer upgrades, set the industry up for a few quarters of solid earnings results,” wrote Hodulik. “These trends should continue until the expected Apple iPhone 7 refresh later this year, whose impact on volumes remains a wildcard. … According to Gartner data, Apple’s iPhone accounts for around 50% of premium smartphone sales in the U.S. or roughly one-third of all phone sales.” Verizon is slated to kick off Q1 telecom earnings when it reports April 21. Consumers have been upgrading to new smartphones at a slower pace, says Hodulik. “Subscribers are electing to hold their devices longer and save money once the handset is fully paid off,” he added. “Postpaid subscribers now keep their devices for 3.3 years on average, up from 2.8 years in 2011. This is putting pressure on upgrade rates, which is in turn driving lower disconnects and fewer gross subscriber adds. We believe this will be a key theme for Q1 earnings, driving another strong quarter of profitability for the sector, especially at AT&T and Verizon.”

Google’s YouTube Finally Gets Invite To T-Mobile Binge On Party

Google’s YouTube finally has an invite to the T-Mobile US ( TMUS ) Binge On party. And, the free video streaming party is getting bigger. T-Mobile on Thursday said it now excludes 50 video websites from subscribers’ monthly data caps, more than double the 24 apps supported when Binge On launched in early November. Netflix ( NFLX ) and Time Warner ’s ( TWX ) HBO were among the two-dozen video websites that T-Mobile first included in Binge On. T-Mobile had said YouTube – the fast growing website of Alphabet ’s ( GOOGL ) Google – could not be supported for technical reasons.  T-Mobile’s network software could not always detect YouTube’s videos, the “Uncarrier”-branded wireless carrier said. Other new video websites that are part of the Binge On program include Discovery GO,  Fox Business and Google Play Movies. On Wednesday, T-Mobile said it would offer subscribers a free year of access to MLB.TV for live broadcasts of Major League Baseball games through its Binge On service. Verizon Communications ( VZ ) no longer counts its own Go90 mobile video service toward subscriber data caps. Verizon has also launched the “FreeBee” sponsored data program, under which companies pay Verizon a fee so that users of their wireless apps can access content without their data consumption counting toward monthly limits. T-Mobile’s Binge On,  however, does not involve payments from content companies to T-Mobile. T-Mobile recently shot down speculation that it was working with Facebook ( FB ) on a sponsored-data type business model, according to reports. Federal regulators thus far have not opposed Binge On or wireless sponsored data programs. Net neutrality rules bar ISPs from throttling, blocking or prioritizing Web traffic. Some critics claim the Binge On program runs afoul of net neutrality rules. Image provided by Shutterstock .

AT&T, Verizon Stock Rally: How TV Auction Could Impact Trading

Shares of  AT&T ( T ) and Verizon Communications ( VZ ) have rallied in 2016, owing to falling interest rates and their relative safety amid the stock market tumult. One factor sure to impact trading for both companies the rest of the year is the government’s auction of airwaves now owned by local TV broadcasters, set to start this month. Shares of the high-dividend-paying AT&T and Verizon are up 13% and 11% so far in 2016, respectively. But higher-than-expected auction spending would hit free cash flow and possibly credit ratings. Many analysts continue to downplay potential spending by wireless phone companies and others, but Citigroup estimates bids could reach $43 billion, in the neighborhood of 2015’s “AWS-3” auction. A Bloomberg survey , meanwhile, estimates the auction will raise only $33 billion, much less than the $60 billion figure floated by some observers in mid-2015. The Federal Communications Commission plans to begin the “Broadcast Incentive Auction” on March 29. The auction, which could last five to six months, will free up an estimated 60 to 80 megahertz of prime, low-frequency radio spectrum for wireless services. Both AT&T and Verizon have talked down their interest in the TV broadcast airwaves, and both have alternatives for spectrum, as IBD reported. T-Mobile US ( TMUS ) has stated it could spend up to $10 billion, while cable TV firm Comcast ( CMCSA ) has filed to be a bidder. There’s fresh speculation Japan-based SoftBank ( SFTBY ), Sprint’s majority owner, could bid, though Sprint ( S ) itself has bowed out. Alphabet ’s ( GOOGL ) Google also recently ruled itself out. Analyst estimates proved far too low for the AWS-3 auction, which ended in January 2015. Most analysts pegged AWS-3 auction spending in the mid-teens of billions of dollars, with the highest estimates around $20 billion. The auction, however, raised more than $41 billion — minus $3 billion in airwaves Dish Network ( DISH ) later surrendered. During that auction, wild rumors about Verizon’s purported spending pressured its stock at points, while AT&T eventually emerged as the top AWS-3 bidder. In the TV broadcast auction, JP Morgan estimates that bidders could spend anywhere from $25 billion to $35 billion. Cowen & Co. estimates AT&T, Verizon and T-Mobile will spend $27.5 billion combined. Comcast and private equity firms loom as wild cards. Several analysts have estimated Comcast’s spending at $5 billion-$6 billion. For the complex, two-part auction to succeed, bidding prices have to reach levels high enough that TV broadcasters follow through and sell the spectrum. If the auction doesn’t proceed as planned, it would be a blow for spectrum-needy T-Mobile, analysts say. Low-frequency airwaves travel over long distances and through walls, improving in-building services. AT&T and Verizon own more than 70% of low-frequency airwaves in the top 100 U.S. markets. FCC Chairman Tom Wheeler, whose legacy will be tied in part to whether the auction succeeds, has downplayed pre-auction comments by AT&T and Verizon, saying it’s normal for bidders to lower expectations.