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U.S. wireless carriers seek alternatives as phone growth slows

U.S. wireless carriers seek alternatives as phone growth slows

U.S. mobile phone companies are starting to realize they need more than phones to keep growing.

Shares of AT&T Inc fell 5 percent on Wednesday after the No. 2 U.S. mobile operator disappointed investors with its report of a net loss of 69,000 phone subscribers in the first quarter. It depended on tablet users instead for growth.

Sprint Nextel Corp, the No. 3 U.S. mobile provider, also showed much lower-than-expected growth in its core service on Wednesday. It cited weak sales of tablet computers, compared with its bigger rivals, on top of issues related to a shutdown of its older Nextel iDen network, which is bleeding customers.

Even industry leader Verizon Wireless depended on tablet users for 300,000 of its net subscriber additions, or almost half of its 677,000 total in the quarter, according to Evercore analyst Jonathan Schildkraut in New York.

“At this point, you’re just trading horses between the carriers,” said Michael McCormack, a Nomura analyst in New York.

In order to keep growing, Sprint said it expects carriers to look at things like machine-to-machine services, which wirelessly link equipment like electricity meters or cars, as well as plying contract customers, also known as postpaid customers, with other devices besides the phones.

“The economic model will change, and if you will, the postpaid phone will not be as dominant in terms of what drives success in the wireless industry as it was for the past decade,” CEO Dan Hesse told analysts during Sprint’s quarterly conference call.

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