What's Wrong With Verizon and AT&T Today?
The Dow Jones Industrial Average is trading sideways today. A couple of technology giants are leading the index this afternoon, but the Dow's two telecoms have slammed on the brakes. AT&T and Verizon are the Dow's worst performers today by a long shot, down 1.5% apiece.
So what's going on in the cellphone stores on Wall Street?
Neither AT&T nor Verizon did much to deserve a drubbing today. Or rather, they already unveiled the facts behind today's drop when they reported earnings over the last couple of weeks. The final catalyst comes from much smaller competitor T-Mobile US , which reported third-quarter results this morning -- and managed to outshine its larger American rivals for once.
T-Mobile added 1 million subscribers in the third quarter, including 650,000 of the high-margin postpaid variety. By comparison, Verizon added 927,000 postpaid customers but only 481,000 postpaid phone contracts, and AT&T signed up just 363,000 new postpaid subscribers overall.
Moreover, T-Mobile seems to be stealing some of the juiciest customers available: 88% of T-Mobile's phone sales were smartphones, compared to 67% for Verizon. AT&T is holding its own with an 89% smartphone sell-through penetration.
So T-Mobile isn't exactly kicking butt and taking names indiscriminately. The ex-German operator is beating Verizon in customer quality but not quantity, and it's the other way around versus AT&T. But it's clear that the small fry is getting some traction against the Verizon-AT&T de facto duopoly, and telecom investors are getting nervous.
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The article What's Wrong With Verizon and AT&T Today? originally appeared on Fool.com.Fool contributor Anders Bylund holds no position in any company mentioned. Check out Anders' bio and holdings or follow him on Twitter and Google+. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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