U.S. mobile carriers such as Verizon Communications Inc. (NYSE:VZ), AT&T Inc. (NYSE:T), T-Mobile US (NYSE:TMUS), and Sprint Corporation (NYSE:S) have made installment plans for smartphones and other devices which will be more convenient for consumers. Instead of paying a huge upfront amount, consumers may sign a contract to make payment easier over a period of two years. This will also give mobile carriers more control over the mobile phones given that the customers will have to pay more since the retail cost is split with multiple bills.
Analysts state that wireless companies such as AT&T Inc. (NYSE:T), T-Mobile (NYSE:TMUS), Verizon Wireless (NYSE:VZ) and Sprint (NYSE:S) will finance around $37 billion device by 2015’s end. Carriers reported how much they financed in previous quarters:
- Verizon Communications Inc. (NYSE:VZ): this carrier financed 12% devices in its Q3 of 2014 with an increased percentage rate of 13% giving a total of 25% in Q4.
- T-Mobile US Inc. (NYSE:TMUS): this company finances almost each and every phone it has given its contract-free Simple Choice plans and EIP options.
- AT&T Inc. (NYSE:T): this carrier was runner up in financing the largest amount of devices with a percentage total of 56% in Q4 of 2014.
- Sprint Corp (NYSE:S): financing was 46% of devices in this carrier.
Jefferies analysts state that over half of the total sale in postpaid phones was due to these four US carriers through their leasing and financing plans. Therefore given these financials, the total amount of the financed phones will be nearly $37 billion. However, US carriers expect that this amount will rise by $13 billion thus making a total of $50 billion by 2017’s end. This analysis helps us conclude that the sales of the financed devices will certainly rise in the near future which is why these mobile carriers are so expectant of their results.
Verizon Communications Inc.(NYSE:VZ) had a return on investment of 13% with its shares closing on Friday at $49.31. The company has a monthly performance of 4.98% with a year-to-date-performance of 6.6%.
T-Mobile US Inc. (NYSE:TMUS)’s stock closed at $31.75 on 13th Feb, which had seen a stock price amounting to $31.68 on the same day thus showing an increase of 0.51%. T-Mobile’s weekly performance stood at 1.41%.
AT&T Inc. (NYSE:T), rose 0.14% on last trading day which closed at $34.66. The mobile carrier is moving at 15.09% more than its 52 week low and is still -4.98% apart from it. The company has a return on investment of 4.90% with a return on equity of 6.90%.
Shares of Sprint Corporation (NYSE:S) rose 1.55% on its previous trading day. They closed at $5.23. It had a price-to-sales ratio of 0.59 with a 0.10% of insider ownership.
Therefore, results state that the mobile carriers are good enough buys for investors given their leasing and financing offers are being appraised by consumers with forecasts showing a positive performance. The industry might just reach its all time high through its scheme of gaining a larger consumer pool.
