Changing its outlook on the U.S. wireless industry from stable to positive, Moody’s Investors Service anticipates that the nation’s two largest wireless providers "will see a big jump in cash flow in 2013."
Moody’s, the credit ratings agency, cited the low number of customers defecting as the main reason for EBITDA growth at Verizon Wireless and AT&T Mobility.
"Stable pricing and the perceived strength of AT&T’s and Verizon’s service offerings are helping them keep customers, now that the iPhone is no longer exclusive to any carrier," Moody’s said in a report Wednesday. "New fees designed to slow the rate of handset upgrades and efforts to improve efficiencies are also contributing to low churn and improved profitability."
The outlook isn’t entirely rosy. Moody’s cited challenges facing smaller carriers, including T-Mobile USA, which the credit ratings agency said has a churn rate (3 percent) that is about triple that of AT&T and Verizon Wireless and above the industry average (1.8 percent).
AT&T Mobility and Verizon Wireless are responsible for 67 percent of the wireless industry’s revenues and roughly 82 percent of earnings before interest, taxes, deprecation and amortization (EBITDA), according to Moody’s, which anticipates that the two carriers will achieve EBITDA growth close to 7.5 percent next year.