SOURCE: Five Star Equities

Five Star Equities

May 21, 2012 08:20 ET

Wireless Carriers Look to Increase Profits by Chipping Away at Phone Subsidies

The Paragon Report Provides Stock Research on Sprint Nextel and Verizon Communications

NEW YORK, NY--(Marketwire - May 21, 2012) - Wireless carriers have begun to chip away at phone subsidies that mostly benefit phone makers like Apple. Carriers commonly pay full price for mobile phones and then sell them to customers who sign long-term contracts at a deep discount. The recent moves by wireless carriers to increase profits have been garnering applause from analysts. Five Star Equities examines the outlook for companies in the Wireless Services Industry and provides equity research on Sprint Nextel Corporation (NYSE: S) and Verizon Communications Inc. (NYSE: VZ).

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"Optimism has increased that we are witnessing the leading edge of a more disciplined, and more profitable, future," Craig Moffett, a telecom analyst at Bernstein Research, wrote in a recent research note. The question now, he wrote, is how much profits can increase for companies as a result of "increased discipline and pricing power."

U.S. carriers have been increasing fees in attempts to discourage customers from upgrading to new phones. According to a recent article in the Wall Street Journal Verizon last month charged a $30 upgrade fee to some customers, and both AT&T and Sprint recently have doubled upgrade fees to $36. "It will have a meaningful impact on us in managing those handset costs," AT&T CFO John Stephens said on a conference call with analysts last month.

Five Star Equities releases regular market updates on the Wireless Services Industry so investors can stay ahead of the crowd and make the best investment decisions to maximize their returns. Take a few minutes to register with us free at and get exclusive access to our numerous stock reports and industry newsletters.

Sprint recently announced that the Western States Contracting Alliance (WSCA) has awarded Sprint a four-year $2 billion contract to serve as one of its wireless products and services providers. The contract with WSCA, a national public sector purchasing consortium, represents one of the largest for Sprint in 2012.

Verizon and Cellcrypt, a provider of government-grade encrypted voice-calling software, will collaborate to deliver secure mobile calling capabilities to the U.S. government. Under terms of a recently signed strategic agreement, the two companies will jointly market Cellcrypt's mobile voice-encryption solution to military, intelligence and civilian agencies.

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