Verizon Leads AT&T In Postpaid Smartphone Subscribers

Recent estimates by the Kantar Group, a market research and analytics firm, show that Verizon Communications Inc. (VZ) was leading wireless telecom companies in smartphone sales for the three months ending August 2013. According to Kantar’s estimates, Verizon sold almost 37% of all devices sold in the US market during that period, while its main competitor, AT&T Inc. (T), lost market share.

Changes in market shares of smartphone sales can have major implications for wireless carriers, who are operating in an already saturated market with limited growth options. Smartphones are the largest growth drivers for the wireless industry and their owners use more data and therefore have higher data ARPUs, which is the fastest growing revenue stream for the industry.

AT&T was given exclusive rights to market the iPhone when Apple Inc. (AAPL) released it for the first time in 2007. This was an important privilege for AT&T, as it became the only company authorized to sell and distribute a revolutionary new product that was an instant hit with customers. It was not until February 2011 that Verizon starting selling iPhones on its network, and the device was introduced to Sprint and T-Mobile customers even later than that.

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Battle Of The Dividends – Verizon Vs. AT&T

The telecom industry has continuously evolved and reinvented itself in response to technological advancements. The wireless segment is currently its main source of revenues, and AT&T (T) and Verizon (VZ), two of the largest players in the industry, have expanded their product portfolio accordingly to include a wide variety of products besides their legacy wireline services.

Due to the robust nature of the industry, telecoms have traditionally been a safe haven for investors looking for steady growth and stable dividends. On top of that, telecom stocks also offer immunity from market swings: for example, Verizon’s Beta value is 0.53, compared to AT&T’s 0.69.

Both stocks have a large number of investors from the retirement and pension fund managers’ community. About 57% of AT&T’s outstanding shares are held by institutions, out of which almost 95% are held by investment advisors, pension funds and insurance companies. Institutional ownership in Verizon is about the same, with 59% of its total outstanding shares are held largely by a shareholder base similar to AT&T’s.

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Still Bullish On Verizon

Verizon Communications Inc. (VZ), the New York-based telecommunications giant, announced earnings for its third quarter of fiscal year 2013 (3QFY13) on October 17. The company seems to be doing well, and has beat analyst estimates for both revenues and earnings per share (EPS) for the quarter.

Verizon’s per share earnings of $0.78 beat estimates by $0.03, posting 16% growth over the year-ago quarter. In comparison, Verizon’s most significant competitor – AT&T Inc. (T) – posted slower growth of 14.28% year-over-year (YoY) for the comparable period.

Verizon’s total operating revenues grew to $30.28 billion, up 4.4% compared to 3QFY12. Net income from Verizon Wireless totaled $2.23 billion, and is expected to increase going forward as Verizon completes its repurchase of a 45% stake in Verizon Wireless held by the Vodafone Group Plc (VOD).

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