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What AT&T, T-Mobile Earnings Mean For Apple iPhone Demand

AT&T (T) on Tuesday reported record-low wireless churn — fewer subscriber disconnects as customers delayed upgrading smartphones — joining T-Mobile US (TMUS), which also reported record low churn on July 19.

X The upshot: Consumers are likely waiting for the new Apple (AAPL) iPhones before switching service providers and upgrading, said Jonathan Chaplin, analyst at New Street Research, in a report.

AT&T reported churn of 0.8% for the June quarter while T-Mobile reported churn of 1.1%. At that rate, AT&T would lose less than 10% of subscribers over 12 months, while T-Mobile would see about 13% leave.

Industry churn has been falling despite intense promotional activity. Market-share gains by T-Mobile and Sprint (S) pressured AT&T and Verizon Communications (VZ) to reintroduce unlimited data plans early in 2017. Verizon reports June quarter earnings on Thursday.

Apple could be delayed in shipping the new iPhones, reports say.

The big question is whether wireless wars will get worse as the release of new iPhones approaches, says Simon Flannery, a Morgan Stanley analyst in a report.

"Carriers view iPhone launches as opportunities to gain market share, which usually elevates competitive behavior," he said in a report. T-Mobile in 2016 launched a "free" iPhone promotion that was replicated by other wireless firms, he noted.

"When promotions are quickly replicated, the biggest beneficiary is usually Apple," Flannery added.

AT&T reported second-quarter adjusted profit that topped views and in-line revenue as pay-TV subscriber losses were higher than expected.


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AT&T said wireless revenue was flat at $9.73 billion. AT&T said it lost 89,000 postpaid phone subscribers, narrowing its loss from 180,000 in the year-earlier-period. Analysts had estimated that AT&T would lose 256,000 postpaid phone subscribers. AT&T aims to bundle pay TV and wireless services.

"AT&T managed the competition favorably in (Q2), and while it promises to get more aggressive with the iPhone launch, the carrier's integrated strategy is starting to prove out," said Colby Synesael, a Cowen & Co. analyst in a report.

AT&T shares rose 2.6% to 37.15 before the opening bell on the stock market today. Apple rose 0.4% to 153.30 as it closes on a 156.75 flat-base buy point.

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