Mobile Sands

January 29, 2009

Q4’08 results show AT&T outpacing Verizon Wireless

Filed under: 3G, Smartphones — AJ @ 4:03 am

Though acquiring Alltel makes Verizon the largest wireless carrier in the US,  Q4’08 results presented by AT&T and Verizon this week show that AT&T is beating Verizon on practically every operating metric.

  • Churn: While AT&T’s churn has been stable at 1.2% for the last 12 months, Verizon’s churn increased to from 1.2% to 1.35% over the same period
  • ARPU: While AT&T’s ARPU increased by 3.9% to $59.59 compared to 4Q’07, Verizon ARPU increased by just 1.4% to $51.72 over the same period.  Further, Verizon’s ARPU actually declined in the 4Q’08 compared to 3Q’08
  • Net Adds: While AT&T added 2.1 million subscribers in the last quarter of 2008, Verizon added just 1.25 million

What should worry Verizon (and Vz investors) most is the decline in its ARPU from $52.18 in 3Q’08 to $51.72 in 4Q’08.  When you look at this decline along with AT&T’s claim that ARPU for iPhone customers was $95.3, 1.6 times higher than the ARPU of its overall customer base and that 40% of iPhone 3G customers (i.e.  1.7 million) were new customers; it indicates that high value subscribers are leaving Verizon in droves.

I would estimate that Verizon lost approximately 650K subscribers that had an ARPU of $95 in 4Q’08 and gained around 1.9M subscribers with an ARPU of $50. This would account for 1.25M net adds and a fall decline in ARPU from $52.18 to $51.72.  Sounds plausible?

For years, Verizon really had a superior network.  It not only had the best coverage but it was also first with 3G (EVDO).  Verizon’s network advantage is quickly disappearing vis-à-vis AT&T.  AT&T, with its “more bars in more places” campaign has convinced customers that its coverage is as good as Verizon’s. AT&T’s HSDPA network delivers faster downlink speeds that Verizon’s EV-DO network, and AT&T benefits from global economies of scale in network equipment and handsets.  Verizon needs to do more now – on handsets and network – than pinning its hope on being first to build out LTE. 

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2 Comments »

  1. […] In coming years, for a handset to succeed, it will need a rich set of applications. People will not only buy a handset for how it looks or what it costs, but for what it does. Applications will be source of stickiness for both handset vendors and operators. Operators and handset vendors who will not have access to a large ecosystem of application developers will lose subscribers, market share and profits. See my previous post comparing Verizon and AT&T’s performance in Q4′2008. […]

    Pingback by An Amazon App Store? « MobileSand - Amit Jain’s Blog — February 13, 2009 @ 8:38 pm

  2. […] Verizon may still have the best voice and data coverage in America,  but advantage has now shifted to AT&T.  With HSPA, AT&T can now boast of having the fastest 3G network and AT&T’s GSM network allowed it to get Apple’s iPhone device in 2007. As Verizon CEO Ivan Seidenberg admitted in a recent interview with the WSJ,  Apple never seriously considered building a CDMA device.  And it is the  iPhone that helped AT&T outpace Verizon in 2008. […]

    Pingback by AT&T’s Investment in GSM/UMTS Delivers Subs & Easier 4G Uprade « MobileSand - Amit Jain’s Blog — April 21, 2009 @ 4:11 am


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