Verizon Dials Up User Gains

Verizon Wireless looks to have the hot hand in the cell-phone business as the second-quarter user tallies start coming in.

The nation's No. 2 wireless shop -- a venture of Verizon (VZ) and Vodafone (VOD) -- may match last quarter's strong showing by signing on 1.6 million net new users, according to a Merrill Lynch report. That's 100,000 more subscribers than Wall Street had expected Verizon to add, and the gains probably come at the expense of No. 1 Cingular, says Merrill.

Merrill cut its second-quarter sub-gain forecast for Cingular to 1.2 million from 1.3 million last week.

In fact, some analysts predict that Cingular, a joint venture of SBC Communications (SBC) and BellSouth (BLS), may have a tough time reaching the crucial million-subscriber-add mark.

Observers say Verizon Wireless has been highly effective in some of its promotions, such as a family plan that charges $10 for additional lines.

But if Verizon Wireless is emerging as one of the leaders in the cell-phone boom and Cingular is ceding some ground, the T-Mobile unit of Deutsche Telekom (DT) may be shaping up as the laggard. T-Mobile is aggressively trying to drum up last-minute sales through price cuts.

T-Mobile's latest promotion is 1,000 minutes for $40 a month -- the lowest rate among the big five service providers.

Cingular has surprised analysts the past two quarters. In April, the Atlanta mobile-phone service posted sturdy wireless subscriber growth with 1.4 million new users. It was the second consecutive solid performance from the big telco that had taken on many of the disgruntled former AT&T Wireless customers who came with the merger.

But as TheStreet.com reported, measuring subscriber growth isn't an exact science, and often, thanks to double counting and neglect, a lot of chaff gets into the numbers.

Of course for other industry watchers, strong new user gains by Cingular would suggest the company is on the right path.

"Like they say," says Ovum analyst Roger Entner, "the first time is luck, the second time might also be luck, but the third time is skill."

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