For AT&T and VZW, the subs just keep on coming

The US crossed the 80% mobile penetration mark last year, which is supposed to be the indicator of a mature market beset with low customer growth. But AT&T and Verizon Wireless have once again recorded 1 million-plus net subscriber quarters.

This week AT&T announced 1.3 million new additions in the second quarter, while on Tuesday Verizon revealed 1.5 million net adds. CTIA estimates total US wireless subscriber base at 262 million, while the last US Census estimate puts the nation’s total population at 300 million. That’s an 87% penetration, though that it isn’t likely a literal representation of the percentage of men, women and children who own cellphones. Many people may have multiple wirelessly connected devices—businessmen with a BlackBerry for work and a separate phone for personal use, laptop 3G cards and even machine-to-machine connections—80% is the point in European and Asian countries where rapid growth rates started petering off.

Despite those impressive numbers, some analysts projected more. Stifel Nicolaus projected 1.45 million net adds for the quarter, and pointed out that actual retail postpaid subscriber additions had fallen 2% year-over-year. Most analysts found AT&T subscriber growth in line with expectations. Bernstein senior analyst Craig Moffat said AT&T overshot his estimates by more than 100,000 and took note of AT&T’s impressive churn rate of only 1.1%.

So if current customers are staying put and the large operators are growing their subscriber bases, where are these new customers coming from? The obvious answer is Sprint, which has taken some rough hits over the last year, shedding customers much to the benefit of AT&T and Verizon. But Sprint has shown signs of improving its sliding customer retention rates, Moffat said.

“In recent quarters, results at AT&T and Verizon have relied on weakness at Sprint in order to sustain growth,” Moffat said in a research note. “Conversely, expectations of a Sprint turnaround hinge on gains at the expense of [AT&T and Verizon Wireless]. Those don't seem to have materialized. As we have written in the past, improved churn – as has been rumored at [Sprint] – doesn't help if your competitors' churn rates are improving too. The focus is now on gross additions… not Sprint's long suit.”