Verizon Wireless Seen Topping Cingular - Forbes.com

Verizon Wireless Seen Topping Cingular - Forbes.com

Market Scan
Verizon Wireless Seen Topping Cingular
07.25.05, 12:40 PM ET

Deutsche Bank reiterated a "buy" rating and $38.50 price target on Verizon Communications (nyse: VZ - news - people ).

According to Deutsche Bank, Verizon Wireless added 1.9 million subscribers in the second quarter, ahead of the research firm's estimate of 1.4 million to 1.5 million and the best quarter in Verizon's history. The data came from Vodafone's (nyse: VOD - news - people ) quarterly key performance indicators release. Verizon Wireless is a joint venture between Verizon Communications and Vodafone.

"Today's performance could also provide a boost to Verizon's group results tomorrow, with the only question being the degree to which better-than-expected wireless performance will offset poor wireline metrics. Following SBC Communications' (nyse: SBC - news - people ) results, it is conceivable that Verizon's access-line loss could exceed 5.5% year-over-year.

The research firm believes that the record performance are due to better-than-expected churn rates. "This highlights the persisting gap between Cingular and Verizon Wireless in terms of ability to simultaneously deliver strong growth, low churn and, we believe, relatively stable average revenue per unit, with Verizon continuing to win a larger share of national industry net adds than Cingular."

Deutsche Bank sees this data as positive for the industry: "With Cingular--1.2 million adds--and Nextel Communications (nasdaq: NXTL - news - people )--550,000 adds--having reported results last week, it now appears that the five national wireless carriers will add closer to 5 million subscribers in the second quarter versus the 4.5 million we had originally expected, and up from 4.8 million last quarter. This would represent the second-best ever quarter for the industry, and should dismiss any fears of a near-term industry slowdown."

Cingular is a joint venture between BellSouth (nyse: BLS - news - people ) and SBC.