Ina Fried

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Cellphone Unit Sales in First Quarter Were “Weakest in Years”

With no new iPhone model to boost sales, major U.S. carriers saw little if any gain in traditional contract customers during the first quarter, according to a new report.

Indeed, Jefferies & Co. said that the first quarter could mark the first time ever that the number of postpaid customers actually declined.

“A Jefferies proprietary handset survey suggests volume expectations for [the first quarter] are the weakest in years, in line with our view that net adds are significantly lower in the quarter after an iPhone launch,” analyst Thomas Seitz said in a research note.

Jefferies sees “modest” growth in traditional customers for AT&T and Verizon, but declines at both T-Mobile and Sprint, which saw a big jump last quarter — its first with an iPhone.

“We believe there is a distinct possibility that Q1 could be the first time that the postpaid market, as a whole, loses subscribers,” Seitz said. Seitz noted that sales tend to be weak in the quarter immediately preceding and immediately following the launch of a new iPhone model.

Sales of prepaid phones may have also seen slower growth in the quarter, Seitz said.

Nonetheless, the carriers should see some revenue growth, thanks in part to the continued growth of smartphones as well as recent price hikes.

But, with smartphones already making up a big chunk of the business and nearly everyone having a cellphone, Jefferies said the wireless providers will be challenged to continue to post gains.

“Voice revenues are already in decline,” Seitz said. “We believe a material drop off in the growth rate of data revenues from slowing smartphone adoption, particularly in (the second half of the year), is a growing risk.”

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