AT&T, T-Mobile, Verizon might reduce prices due to slow growth

Summary: The wireless industry is facing slower growth and rising costs, but instead of raising prices, carriers like T-Mobile and Verizon may start cutting them to stay competitive. If this sparks a price war, customers across all major networks could see lower phone plan costs in the near future.

We know that over the years, we’ve seen the prices of our subscriptions go up. It’s not just subscriptions, but carrier prices as well. Right now, the world’s economy doesn’t look so hot. This means that companies might be thinking of raising prices again to stay afloat, but analysts think otherwise.

The industry slowdown

According to analysts over at TD Cowen, all three major carriers are dealing with slower growth. The analysts estimate that the industry will add about 1.38 million new postpaid phone lines this quarter. That might sound like a huge figure, but in reality, it is 12% less than last year. This is a big deal in an industry that’s already running out of new people to sign up.

There’s more trouble on the horizon, too. New tariffs could make network equipment pricier. While carriers can delay 5G upgrades or stock up on gear to buy time, they can’t avoid rising costs forever.

In a research note to investors, analysts at BofA Global Research said, “Heightened uncertainty could cause businesses to pause investment, hiring, or projects that could impact sales to the telcos. The potential for higher handset costs from tariffs, if they are implemented and sustained, could cause subscribers to hold on to devices longer, which would help margins and free cash flow. However, the industry is built on a device subsidy model that would be challenging if tariffs materially raise the cost of handsets.”

AT&T, Verizon, and T-Mobile to (hopefully) reduce prices

People are also holding onto their phones longer, especially if prices go up. That could force carriers to rethink the usual deal of getting a phone at a discount in exchange for staying with the company. If fewer people upgrade, those deals may not make sense anymore.

This is why carriers like Verizon and T-Mobile could ultimately resort to lowering their prices this year. Verizon has already made the first move by adopting a “price lock” concept similar to T-Mobile. That could kick off a price war. If it does, we expect other carriers like AT&T and T-Mobile to follow.

It makes more sense for Verizon, however. This quarter, the carrier expects to lose over 300,000 customers, while its rivals are gaining new ones. To stem the losses, the company may consider lowering its prices to attract customers back. That’s good news, not just for Verizon’s customers but for the industry as a whole if other carriers follow suit.