Verizon, AT&T wireless upgrade rates show improvement, but still tepid: Wells Fargo

Recent quarterly results from AT&T (NYSE:T) and Verizon (NYSE:VZ) showed improvements in wireless upgrades, but they’re still coming at a “tepid” pace, Wells Fargo said.

AT&T added 403,000 postpaid phone net subscribers, with a churn rate of 0.93%. It also had an upgrade rate of 3.5%, up from 2.9% in the second quarter, but down from 3.9% in the year-ago quarter. Meanwhile, Verizon added 349,000 postpaid phone subscribers and had a churn rate of 1.16%. Verizon’s upgrade rate during the quarter was 3%.

“On a combined basis, we would estimate AT&T + Verizon smartphone upgrades at -6.8M, -9% y/y compared to -17% y/y and -10% y/y in 1Q24 and 2Q24,” analyst Aaron Rakers wrote in a note to clients.

“We see [Verizon and AT&T] results as reflective of an ongoing tepid smartphone upgrade environment,” Rakers added, in reference to Apple’s (NASDAQ:AAPL) iPhone lineup. Rakers has an Overweight rating and $275 price target on Apple.

On Wednesday, TF International Securities’ analyst Ming-Chi Kuo said iPhone 16 orders have been cut by around 10M units for the next few quarters.

Apple is set to report fiscal fourth-quarter results after the close of trading on October 31. A consensus of analysts expect the company will earn $1.55 per share on $94.26B in revenue.