Verizon Wireless Vs. Cingular Wireless
NEW YORK - Verizon Wireless, the hulking champ of the cellular world, is about to meet a new contender.
Any day now, the Federal Communications Commission is expected to recommend the approval of Cingular Wireless' $41 billion buyout of AT&T Wireless (nyse: AWE -
Cingular, a joint venture between SBC Communications (nyse: SBC - news - people ) and BellSouth (nyse: BLS -
news - people ), is currently the No. 2 carrier, and AT&T Wireless is No. 3. The post-buyout Cingular could have around 46 million customers, and would likely boast the largest and most robust coverage area of any carrier.
The deal is expected to close by the end of the year. But even if the merger's generally considered a foregone conclusion, Verizon Wireless--a joint venture of Verizon Communications
(nyse: VZ - news - people ) and Vodafone (nyse: VOD - news - people )--isn't going to give up the top spot easily. The company has a loyal customer base, solid network and fast data services, and will put up a hardy fight.
The buyout is also likely to cause defections as customers question whether they want to stick with Cingular or move to a new provider. That churn, the industry name for customers discontinuing service, may help build Verizon's base, as well as that of competitors including Sprint (nyse: FON - news - people ) and T-Mobile USA, a subsidiary of Deutsche Telekom (nyse: DT - news - people ).
According to S&P Research, in 2004, Verizon has averaged a monthly churn rate of under 2%, while Cingular averages about 2.5% to 3%. AT&T has a particularly lousy average of around 3.4%. Churn rate is the the number of customers who discontinue service over a period of time, divided by the average number of total customers.
Correction: January 30, 2008
An article in Business Day on Tuesday about
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