Posted on: Tuesday, January 7, 2003

Fewer opt to jump on cell-phone bandwagon

By Tom Giles
Bloomberg News Service

SAN FRANCISCO — Wael Mohammad saw firsthand that AT&T Wireless Services Inc. and other U.S. national mobile-telephone carriers had a slower holiday season this year.

As manager of Wireless One, a San Francisco seller of mobile phones, Mohammad reported no increase in AT&T Wireless sales during the holiday season over last year. Nextel Communications Inc. had a "slight" gain, he said.

"National carriers are crying, complaining that the fourth quarter wasn't all that good," said Mohammad, 29, who has sold phones since 1996. Neither discounts nor phones with cameras and games were enough to lure new customers in a nation where half the population already has a mobile phone, the manager said.

AT&T Wireless, Verizon Wireless Inc. and rivals probably signed up 25 percent fewer customers in the quarter compared with a year earlier, capping the worst year for growth, analysts said.

Many people decided against buying phones amid a sluggish economic recovery and as unemployment remains at an eight-year high, they said. Earlier price cuts left little room for holiday discounts.

The six biggest national wireless companies probably added 3.2 million customers in the latest quarter, said Legg Mason analyst Craig Mallitz.

For 2003, new subscribers are likely to drop to 11.2 million from 13.2 million in 2002, Mallitz said.

U.S. wireless companies gained 4.8 percent more customers in the first half of 2002, the slowest rate ever, bringing total subscribers to 134.6 million, according to the Cellular Telecommunications & Internet Association.