How Wireless Carriers Are Faring as Consumers Cut Costs

Consumers are looking to cut costs wherever they can. Looking at MSSI statistics of five major wireless carriers reveals that the cell phone industry is no different. Spending levels at Sprint Nextel (NYSE: S), Verizon (NYSE: VZ), AT&T (NYSE: T) and T-Mobile (NYSE: DT) have all seen changes since October of last year.

This month’s MSSI data shows that monthly average spending at Verizon and Sprint increased by 3% and 1% respectively, whereas T-Mobile and AT&T observed declines of slightly more than 1% each. But how are these firms fairing in a longer time frame?

click to enlarge image

As the chart shows, since October the results for these four firms are more noteworthy. Both Verizon and AT&T have seen relatively stable revenues, with the average Geezeo customer spending 4% more and AT&T customer 1% over this period.

The numbers are not as encouraging at competitors Sprint and T-Mobile. The two firms have both seen average spending by Geezeo users fall overall since October. T-Mobile’s customers spending dropped by 9.36% and Sprint’s customers by an even larger 13.36%.

Since all these firms operate on contractually set rates, such declines indicate that Sprint and T-Mobile are seeing less new or continued contract agreements than their larger competitors, which can lead to lower revenues from both subscription fees and other earnings from extra features. It important to note, however, that all four of these firms have seen positive spending figures from this time last year, in both overall and year on year statistics.

This being the case, Verizon and AT&T seem to be large enough to handle this economic environment better than Sprint and T-Mobile.

This data was compiled by the Geezeo Main Street Spending Index (MSSI).

Disclosure: no positions

Comments

[Aryamehr]

As I inform most of my clients, the trailing twelve months is not a good enough indication for anyone to bet their lives on. If you looked where Apple was before the introduction of the iPhone you will see my point. There are many factors one needs to incorporate into his econometric analysis to guide us through the economic gauntlet. One factor is cause and effect and the latency between them. If a company begins to lose customers, it is usually because of prior events or lack of vision. This is a good example of what happened to Sprint, however they manifested their true DNA by heeding to the Darwinian rule of "acclimating to the changing environment." They first changed management, which brought in a fresh team. They cut expenses where necessary and heeded to customer needs; lowered their debt by one billion and added close to another two billion to their balance sheet. They got an exclusivity from Palm for the new Pre and engineered a joint venture with Clearwire by donating over $14 billion of assets to the venture, which includes the likes of Intel, Google, Time/Warner, Comcast etc, who also donated $3.2 billion. Last but not least this partnership is the only venture that can offer 4G data download speeds, albeit only in a few cities, however the results from their latest 4G introduction in Portland have been phenomenal. By the end of 2009 many other cities will also be converted into 4G, such as Las Vegas, Seattle, Honolulu and the Charlotte area, with New York, Boston, Washington, Houston and San Francisco following next year. To date all I have seen is ATT and VZ talk and talk interminably about future 4G. Well folks Sprint is already way ahead and by the time they have a ubiquitous 4G network in operation, ATT & Verizon will be two year behind, and mind you at a higher cost. If we are to believe the independant experts Sprint has the most dependable 3G networks in the nation and they also have 4 times the geographic coverage of ATT. According to Gizmodo, a well respected tech website, that gets 80 million hits per month, Sprint came in first in data download speeds. The aforementioned can be easily verified. Now tell me Sprint is a company that is doomed? If you still believe so then you must be on "crack."

2009 Mar 06 01:15 PM

[Geddy]

You're probably going to lose a lot of your "clients" then my man! No one has yet to invest $14B in Clearwire. Having taken almost 2yrs to buildout Portland doesn't bode well to stay ahead of VZW, which by the way will launch multiple LTE markets by end of 2009 (so much for "time to market" advantage Clearwire claims to have). The costs are not higher in price (again, might want to check your stats before letting your "clients" know your stories). Sprint does not come close to network coverage and reliability as the other carriers (please, feel free to check any/all reputable publications; i.e.-JD Powers, Nielson, etc). Mark my words, Sprint will more than likely be purchased by someone else.

2009 Mar 07 01:08 PM

[Aryamehr]

Geddy, Sprint transfered $14 plus billion for its 51% stake in Clearwire. If I were you I'd check Gizmodo's site and verify my findings, Sprint came in first in download speeds when comapared to Verizon & ATT. To date Sprint and now its partner Clearwire are the only company to offer 4G. Verizon and ATT have done nothering but pucker and pucker what they intend to do. Talk is cheap and until they at least layout a 4G platform they won't have 4G. Verizon does not and will not have a 4G platform anytime in 2009. All they have done is spin what they wish to do, which is very different to doing something. Everytime Sprint or Clearwire accomplish something all we hear is Verizon is going to do..., Verizon is will do..., Verizon this and that..., but we don't see any results and mark my words you will not see 4G from Verizon or ATT in 2009. By that time Sprint and Clearwire will have added 4G to Baltimore, Portland, Las Vegas, Seattle, Honolulu and the Charlotte area. Sprint's exclusivity with the Palm Pre will give it a major advantage in Smart phones and unequivocally add a substantial number of new subscribers.

2009 Mar 09 02:57 AM

[Geddy]

Let's talk about this at the end of 2009 when LTE is launched in multiple markets by VZW...& now MetroPCS (just announced the same; markets on line by 2009). Sprint is in a tailspin (& Clearwire with it) as seen by over a year's worth of data (THE only carrier to EVER lose customers multiple quarters in a row).

By the way, Gizmodo is not a "reputable" source. I suggest something that we ALL are aware of & trust, JD Powers, Nielson, Consumer Reports, Wireless Week, RCR, etc. I believe you'll see what you report from "Gizmodo" conflicts with them.

2009 Mar 09 12:32 PM