Analysts from the financial firm, Merrill Lynch believe that Verizon Wirless will have gained market share during the second quarter of this year (Q2 05). This comes at the expense of Cingular Wireless where problems migrating ex-AT&T customers is slowing net additions.

Merrill Lynch staff visited some 80 US stores in 4 markets over the past six weeks.

Essentially, they think that the AT&T Wireless migration is probably past the "early adopter" stage. They sensed that some former AT&T Wireless customers, that have not yet migrated, are getting upset when told that in order to get a new phone, they must switch to a potentially more expensive Cingular plan and pay the US$18 activation fee. The analysts also sensed that some Cingular customers are starting to get frustrated that their coverage has not yet improved, contrary to the advertising and what some store personnel are saying.

Sales at T-Mobile were steady too, although T-Mobile continues to be relatively aggressive on promotions.

Interesting, at the 8th Annual Merrill Lynch TMT Conference held earlier this month, Thomas Winkler, CFO T-Mobile noted that a sale is a "theoretical" possibility (but with a big emphasis on "theoretical"). T-Mobile understands that ultimately a lack of spectrum / data strategy will be a competitive disadvantage, and are lobbying the parent company for the flexibility to invest.

The analysts estimate that over two-thirds of the phones currently being sold are camera phones, however, some customers specifically ask for a basic non-camera phone, which could be a boost for both Nokia and SonyEricsson who recently announced plans for "basic" handsets.

Subscriber Estimates for 2Q05E

1Q 05
2Q 05E
2Q 04
Company Net Additions
Cingular
1,419,000
1,200,000
424,000
Nextel
496,000
500,000
546,000
SprintPCS
518,000
500,000
505,000
T-Mobile
957,000
900,000
1,092,000
Verizon Wireless
1,636,000
1,600,000
1,535,000

5,026,000
4,700,000
4,102,000
Total Gross Additions
Cingular
4,800,000
4,716,861
4,580,065
Nextel
1,184,275
1,210,685
1,200,192
SprintPCS
1,860,000
1,834,376
1,670,000
T-Mobile
2,451,570
2,472,564
2,339,232
Verizon Wireless
3,416,897
3,403,828
3,260,928

13,712,742
13,638,314
13,050,417
Total Churn
Cingular
2.2%
2.3%
3.0%
Nextel
1.5%
1.5%
1.6%
SprintPCS
2.5%
2.4%
2.3%
T-Mobile
2.8%
2.8%
2.8%
Verizon Wireless
1.3%
1.3%
1.5%
Weighted Ave.
2.0%
2.0%
2.5%

Source: Merrill Lynch research estimates and company data.
Cingular 2Q 04 actuals are pro forma for AT&T Wireless.

Verizon Wireless Gaining Market Share