Wireless Carriers Finishing Year Strong, but Challenges Loom: Moffett

population growth, allowing each of the Big Three to meet or beat their subscriber targets,” the note said: “Handset upgrade rates started the year at an almost implausibly low level … and then moved even lower from there. Low upgrade rates meant low churn, modest competitive intensity, low customer acquisition and retention expense, and high margins.” But one potential threat to net adds is the promise of President-elect Donald Trump's incoming administration's stance on immigration, Moffett said. That's a potential problem because immigration is a major contributor to industry unit growth, he said. Such growth is "likely to change with tighter borders and would be impacted still more by promised deportations.” Yet Apple investors are betting that more consumers will change their handsets, he said. "There is a clear mismatch between the expectations of Telecom investors, who appear to expect no acceleration in upgrade rates, and Apple investors, who appear to expect a dramatic one." Moffett also warned that the big carriers may be emphasizing convergence too much: “AT&T’s fiber footprint today reaches just 12% of households and will likely never reach more than 25%. Verizon’s fiber coverage today is about 9%, and even with Frontier and their own expanded build program, [it] is targeting only about 18% of housing units by 2028. T-Mobile, with Lumos and Metronet combined, covers less than 2% of housing units today with fiber and has no plausible path beyond about 9% by the end of the decade.” Leaning too hard into convergence, carriers “will inevitably raise consumer expectations and demand for converged bundles … that, by and large, they are unable to offer.”