Friday, October 21, 2011

Wireless Revenue Slowdown?

Both AT&T and Verizon's postpaid average revenue per user growth in the third quarter was slightly lower than consensus estimates.

These trends are prompting analysts to ask whether wireless service, traditionally the telecom industry's most dynamic sector, is headed for a slump. A delay in launching the iPhone 4S probably was a factor.

Nomura Securities analyst Mike McCormack says he is "concerned about the outlook for the economics of the wireless business." McCormack notes that Verizon's wireless service revenues grew 6.1 percent in the third quarter, compared to 6.6 percent in the second quarter.

"We remain concerned about consistent industry deceleration in total service revenue," he added.

Macquarie Capital analyst Kevin Smithen also speculates about whether "some adverse macroeconomic effects [are] beginning to creep through to the carriers."

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