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Once again in the first quarter, Verizon Wireless whipped its rival AT&T. It added 677,000 contract customers to AT&T's 296,000. Revenue per customer, total wireless revenue and wireless operating profit are all growing faster at Verizon. AT&T shares fell 6 per cent after its results were released on Wednesday.

The real story in U.S. wireless, however, is not Verizon versus AT&T. It is AT&T and Verizon versus all comers. The third biggest competitor, Sprint, announced results on Tuesday. It lost half a million contract customers. Yes, the losses all came from the subscriber base acquired in the 2004 Nextel merger. But Sprint's inability to prevent frustrated Nextel customers from going to AT&T or Verizon is the key point.

Sprint is doing better than it was; revenue per customer is improving, for example. But it is still losing ground to the two big boys – and burning cash as it makes its network competitive. Fourth place T-Mobile is adding subscribers at the cost of declining revenue per subscriber. Its operating profit is declining too, as promotional costs rise.

Things are, in theory, changing. On Wednesday, shareholders in fifth-place MetroPCS approved a buyout offer from T-Mobile. And Japan's SoftBank or the satellite-TV provider Dish is likely to get its hands on Sprint. Yet none of these deals are big enough to alter the power balance. The new T-Mobile will have a total of 42 million customers. Verizon has 99 million; AT&T 107 million. Neither Dish nor SoftBank would add to Sprint's customer count of 55 million.

The financial importance of scale in wireless means Verizon and AT&T will retain a huge edge in their ability to invest while the rest stay small (and, incidentally, more indebted). The little guys could start a pricing war. They would lose it. Only one pairing can make a strong third competitor: Sprint and T-Mobile.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 4:00pm EDT.

SymbolName% changeLast
S-N
Sentinelone Inc Cl A
+2.78%23.31
T-N
AT&T Inc
+0.28%17.6
T-T
Telus Corp
+0.37%21.67
TBB-N
AT&T Inc 5.350% Global Notes Due 2066
-2.65%23.5
TU-N
Telus Corp
+0.63%16.01
VZ-N
Verizon Communications Inc
+1.01%41.96

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