T-Mobile is once again projected to lead in postpaid phone net additions in Q4 2023, with TD Cowen analysts expecting 860,000, in line with Wall Street consensus estimates.
T-Mobile reported 850,000 net phone adds in Q3 of 2023 and 927,000 in Q4 of 2022.
The Big 3 carriers report their Q4 results starting with Verizon on January 23, followed by AT&T on January 24 and T-Mobile on January 25. The fourth quarter historically is the biggest quarter for mobile operators.
“The quarter should again be led by T-Mobile and a continued recovery at Verizon,” Cowen analysts wrote in a January 9 report.
The 860,000 net phone adds at T-Mobile will be followed by Charter Communications with an estimated 535,000, AT&T with 506,000, Comcast with 335,000 and Verizon with 230,000 adds, according to Cowen.
For the full year 2024, Cowen expects industry postpaid phone adds of 7.2 million, down 18% year over year versus an estimated 8.7 million in 2023.
The numbers are slightly different but the sentiment is the same at Morgan Stanley. “We expect the Big 3 to deliver another robust postpaid phone net add quarter, at around 1.7 million, led by T-Mobile, which caps another strong year for industry growth, defying fears of a bigger slowdown,” wrote Morgan Stanley’s Simon Flannery in a January 10 research note.
Morgan Stanley expects 883,000 postpaid phone net adds at T-Mobile in Q4 and 500,000 fixed wireless access (FWA) adds at the “un-carrier.” For Verizon, they expect 267,000 postpaid phone adds and for FWA, 404,000 new customers.
AT&T already gave an indication of what to expect for Q4. During an investor conference in December, CFO Pascal Desroches said AT&T would have about 500,000 postpaid phone adds in Q4 2023.
In the third quarter of 2023, AT&T reported 468,000 postpaid phone net adds and mobility service revenues of $15.9 billion, up 3.7% year over year.
AT&T top BoA pick
While T-Mobile is the darling du jour of Wall Street, BoA Securities broke from the pack and named AT&T as its top large cap telecom pick for 2024.
“The wireless business is AT&T’s main growth driver and it continues to perform well in a growing market,” wrote BoA’s David Barden in a research note last month. “Fears around the disruptive effect of cable’s entry into wireless, or Dish’s wireless plans, or speculation that Amazon wants to enter the wireless market have proven unfounded. AT&T subscriber growth is strong despite cable’s market presence.”
Barden and other analysts noted that the wireless industry as a whole managed to raise prices in 2023 without driving consumers away, indicating the demand for mobile service remains high.
Verizon’s Consumer play
The wild card is Verizon’s ability to improve its Consumer postpaid group, where losses have been offset by the Business segment, making its overall results look better.
“Perhaps the biggest debate around Verizon is its ability to return to sustained wireless subscriber and account growth, particularly in the consumer business,” Morgan Stanley’s Flannery wrote. “Recent management changes and subsequent changes to plans, promotions, organizational structure and sales compensation all appear to be gaining traction, but Verizon’s growth continues to lag peers while accounts continue to decline.”
They expect Verizon’s prepaid business to once again lose customers in Q4 despite heavy investments in expanding the Visible and Total by Verizon brands. “We will look for more clarity about the ability to drive further improvements in 2024,” Flannery said.
The changes to Verizon’s management structure, as well as its myPlan and continued C-band deployments, may contribute to a turn-around. Verizon’s newly hired Chief Marketing Officer Leslie Berland just started her first day January 9, so the impact of that appointment is yet to be seen.