UBS sees wireless growth slowing in 2009
NEW YORK (Reuters) - Subscriber growth for U.S. service providers could be about 30 percent weaker next year than in 2008 due to weakening consumer spending, according to a research report from UBS.
UBS analyst John Hodulik lowered his 2009 estimates for customer growth at market leader AT&T Inc and at its biggest rival Verizon Wireless, owned by Verizon Communications and Vodafone Group Plc.
He also said losses of valuable monthly-bill paying customers would be worse than he had previously expected at Sprint Nextel, which has long-struggled to stem losses, citing expectations for an economic recession.
"The last recession took a toll on net adds even though consumer spending held up relatively well. With expectations for consumer spending looking considerably worse this time, we believe net adds will swoon in 2009," Hodulik said.
He sees AT&T adding 4.8 million new subscribers in 2009, down from his previous expectation for 6.4 million and cut his estimate for Verizon Wireless to 4 million from 5 million.
Hodulik sees Sprint, which is set to report third-quarter earnings on November 7, losing 3.3 million postpaid customers next year versus an earlier expectation for losses of 1.5 million.
Hodulik lowered his 2009 earnings per share estimate for AT&T to $2.80 from $2.85 and cut his Verizon Communications view to $2.60 from $2.65.
Hodulik said he was still expecting Sprint to post a drop in 2009 earnings before interest tax, depreciation and amortization to $7.0 billion, from $7.8 billion in 2008.
He also lowered his 12-month share price target for AT&T to $31 from $34 and cut his Verizon estimate to $35 from $37.
The analyst forecast net subscriber additions to slow to 3.9 percent or 10.6 million customers in 2009 from 6.1 percent or 15.5 million in 2008 and 9.6 percent growth in 2007.
Hodulik said that the trend would be exacerbated by the fact that about 90 percent of the population would already have cell phones compared with 45 percent during the last downturn at the start of the decade. He cited a decline of subscriber net additions of 19 percent in 2001 and 34 percent in 2002.
