Carrier Investors flee telecom on price-war fears after AT&T price cut

[EbookReader]

http://www.reuters.com/article/2014/02/03/us-att-pricecut-idUSBREA100K720140203

Shares in U.S. mobile operators fell sharply on Monday after a AT&T Inc price cut fueled fears from investors that market leader Verizon Wireless and other rivals would have to react.

AT&T shares closed down 4 percent a day after the No. 2 U.S. mobile services provider slashed the monthly fee for a data plan from $40 to $15.

Some analysts saw the price cut as a drastic step that could force rivals such as Verizon Communications to response with their own price cuts and, as a result, hurt profits across the industry. AT&T and T-Mobile have been at each other's throats for months, with offers aimed at each other's customers, but many analysts had hoped that fight would be contained.

Shares in Verizon fell 3 percent, as did No. 4 operator T-Mobile US shares, and Sprint stock ended down 5 percent after AT&T's move on Sunday.

"Now we're seeing real evidence of increasing competition having real cost to the industry," said Jonathan Chaplin, a New Street Research analyst who saw the price cut as a sign that AT&T's recent efforts to regain market share lost to T-Mobile had not been successful.

I bet AT&T, Verizon and Sprint executives having been hating T-Mobile in the past year for being such a maverick.

On the plus side, consumers are better off when there is "real evidence of increasing competition."

 

[ugcop]

http://www.reuters.com/article/2014/02/03/us-att-pricecut-idUSBREA100K720140203



I bet AT&T, Verizon and Sprint executives having been hating T-Mobile in the past year for being such a maverick.

On the plus side, consumers are better off when there is "real evidence of increasing competition."

I wouldn't give all the credit to TMO as ATT has planned to move away from the subsidized phone model for some time. It was a workable solution before people found they couldn't live without a cell phone. Now it is no longer needed.

 

[EbookReader]

http://qz.com/169001/verizon-just-h...-price-war-in-wireless-might-soon-be-upon-us/

“The competitive environment has changed again here in the fourth quarter, and you can expect us to respond accordingly.”
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Those fighting words from Verizon chief financial officer Fran Shammo on an earnings call this morning have spooked investors. Shares in the behemoth US wireless carrier are currently down about 3%, wiping about $4 billion off its market value, despite a solid set of quarterly results.
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Why? There has been a lot of talk about a nascent price war in the industry, driven largely by a resurgent T-Mobile. Price wars are great for consumers, but terrible for investors, because they can obliterate profits across an entire industry. The comments suggest Verizon might be preparing to respond to T-Mobile’s recent aggression.

 

[I7guy]

Not verizon, they added a few subscribers last quarter.

As far as t mobile goes there was no where to go but up.

 

[alent1234]

next is deflation in the phone market

i switched my plan to the new plan over the weekend because out of the 4 lines on my contract at least 2 won't care how long they use the phone for. will be years. same with my wife but i might have to buy her a new phone later this year.

either way expect the sales of smartphones to drop now that people have a financial interest in keeping their old one.

i traded in my iphone 5 for a galaxy note 3 and will go iphone again if apple comes out with a baseline phone with a large screen and at least 32GB storage
and as sales lag expect apple and samsung to start offering deals on full price phones bought via NEXT and similar programs. not just through third party retailers

 

[MsRandall]

I set my AT&T account up yesterday - Verizon has 2 weeks to respond or my 4 lines are goooooonnnneee to AT&T

 

[Apple Trees]

Verizon will probably indeed react soon. T-Mobile wasn't big enough to make them blink, but AT&T is.

I figured AT&T would react soon anyway because T-Mobile's moves really were starting to take a toll on their growth. The subscriber growth was pretty pathetic in 2013 so I suppose they figure that a temporary drop in revenue to hold off T-Mobile is worthwile so that they can return to growth.

 

[blarivee]

Looks like Verizon won't be lowering their prices anytime soon.

http://www.computerworld.com/s/arti..._data_plans_for_small_businesses_and_families

 

[Apple Trees]

Looks like Verizon won't be lowering their prices anytime soon.

http://www.computerworld.com/s/arti..._data_plans_for_small_businesses_and_families

That's what they say now. We'll have to wait until the Q1 2014 subscriber numbers come in to see if they will keep singing the same tune. I'm with them right now but AT&T is big enough to put pressure on them.

 

[blarivee]

That's what they say now. We'll have to wait until the Q1 2014 subscriber numbers come in to see if they will keep singing the same tune. I'm with them right now but AT&T is big enough to put pressure on them.

True. Just a thought, something tells me even they have enough margins to absorb minimal subscriber growth (still post profits), or they will find some reasoning why subscriber growth numbers are not important (e.g. market has mature/saturated).