Sprint (S) May Gain as AT&T (T) and Verizon (VZ) Work to Expand Wireless Margins
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As AT&T (NYSE: T) and Verizon (NYSE: VZ) communications retain top spots in the U.S. Wireless market, there is one Dark Horse contender waiting in the wings.
That horse just so happens to be named Sprint Nextel (NYSE: S).
Investors in Verizon and AT&T have at least one concern moving forward and that is how to grow margins. Following Verizon's fourth-quarter report today, CFO Fran Shammo said the company plans to grow margins to 50 percent in 2013, from operating EBITDA margins of 41.4 percent hit in the most recent quarter.
Without sacrificing relationships with hardware makers, its unlikely that the two will be able to work a little more off of the top.
Sprint recently entered a deal for SoftBank to acquire a majority stake in stake in the company. The WSJ notes that SoftBank CEO Masayoshi Son is also willing to endure near-term pressure and price aggressively for a longer-term benefit, meaning any resistance that Verizon and AT&T show might be a boon for Sprint holders. Notably, Sprint also offers Apple's (Nasdaq: AAPL) iPhone along with Google (Nasdaq: GOOG) Android wares and has been working to expand its 4G network.
UBS commented today that another upgrade cycle is in the works for 2013. The analyst noted that about 30.7 percent and 30.9 percent at Verizon and AT&T upgraded in 2012, versus 36 percent and 35.6 percent in the prior year, respectively. Generally, wireless contracts run about two years, regardless of the carrier.
One point to make is that the majority of AT&T's smartphone sales have been the iPhone, with Verizon reporting the same earlier today (6.2 million of 9.8 million total smartphons sold in Q4 were the iPhone). Last year's upgrade numbers might hint at easier comps for AT&T.
Sprint is lower on Tuesday's session while Verizon and AT&T remain in positive territory.
That horse just so happens to be named Sprint Nextel (NYSE: S).
Investors in Verizon and AT&T have at least one concern moving forward and that is how to grow margins. Following Verizon's fourth-quarter report today, CFO Fran Shammo said the company plans to grow margins to 50 percent in 2013, from operating EBITDA margins of 41.4 percent hit in the most recent quarter.
Without sacrificing relationships with hardware makers, its unlikely that the two will be able to work a little more off of the top.
Sprint recently entered a deal for SoftBank to acquire a majority stake in stake in the company. The WSJ notes that SoftBank CEO Masayoshi Son is also willing to endure near-term pressure and price aggressively for a longer-term benefit, meaning any resistance that Verizon and AT&T show might be a boon for Sprint holders. Notably, Sprint also offers Apple's (Nasdaq: AAPL) iPhone along with Google (Nasdaq: GOOG) Android wares and has been working to expand its 4G network.
UBS commented today that another upgrade cycle is in the works for 2013. The analyst noted that about 30.7 percent and 30.9 percent at Verizon and AT&T upgraded in 2012, versus 36 percent and 35.6 percent in the prior year, respectively. Generally, wireless contracts run about two years, regardless of the carrier.
One point to make is that the majority of AT&T's smartphone sales have been the iPhone, with Verizon reporting the same earlier today (6.2 million of 9.8 million total smartphons sold in Q4 were the iPhone). Last year's upgrade numbers might hint at easier comps for AT&T.
Sprint is lower on Tuesday's session while Verizon and AT&T remain in positive territory.
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