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AT&T and Verizon Drag On the Dow; Can Sprint and T-Mobile Really Win?

March 10, 2014

For AT&T and Verizon, the good news is that most people never switch carriers even when superior plan options become available. According to consumer data from Parks Associates, almost half of mobile customers have stayed with their original provider for at least a decade, and only about one in eight have switched three or more times. That behavior effectively creates a competitive moat around Verizon and AT&T and their superior market share, but it doesn't mean that their leadership status is impregnable.

Still, size presents its own challenges. Verizon recently tapped the bond market again with a $4.5 billion offering, and the huge amount of debt it incurred to take full control of Verizon Wireless could present it with substantial financing obstacles if interest rates rise by the time the debt comes due. With so many people looking to AT&T and Verizon for their dividends, any threat to those payouts could cause big problems down the road.

From the article, "AT&T and Verizon Drag On the Dow; Can Sprint and T-Mobile Really Win?" by Dan Caplinger.

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