Light Reading

Verizon Loses Its Postpaid Net Add Crown

Sarah Thomas
4/24/2014
50%
50%

Verizon is starting to bow to competitive pressure in the wireless industry as the operator lost its title as leader of postpaid net additions for the first time in nearly four years.

The crown now goes to AT&T Inc. (NYSE: T), which added 625,000 postpaid customers in the first quarter compared to Verizon Communications Inc. (NYSE: VZ)'s 539,000 additions. (See AT&T Gets 81% of Subs Off Unlimited Data and AT&T Adds 625K Postpaid Subs in Q1.)

This is the first time in 15 quarters that Verizon will not hold the top slot in postpaid net adds, according to Technology Business Research Inc. (TBR) . And, the analyst firm expects T-Mobile US Inc. , which reports on May 1, to outpace Verizon as well due to the rapid adoption of its Simple Choice plans. (See T-Mobile Petitions Operators to Kill Overages.)

As the market leader in size and LTE, Verizon has always acted like it was impervious to the competitive jabs of the smaller guys, such as the self-proclaimed "Uncarrier." But, this quarter, the pressure is starting to catch up with it, primarily in its basic phone customer base. (See Verizon's 4G Strength Keeps It Above the Fray.)

This was a shrinking customer base anyway as 72% of Verizon's postpaid customers now own a smartphone, and 47.9 million of the devices on its network are LTE capable. But the LTE operator also lost customers on basic or 3G phones -- 95,000 in the first quarter -- hence the reason it dropped prices on its More Everything data plan in late March. (See T-Mobile Not Stealing Customers… Yet .)

Despite the subscriber slowdown, Verizon's financial position remains strong. Profit for the quarter was $3.95 billion, or 1.15 cents a share, up from $2 billion, or 68 cents a share, in the previous year. The boost came in large part from the February's close of its $130 billion acquisition of full ownership of Verizon Wireless from Vodafone Group plc (NYSE: VOD). (See Verizon Profit Climbs in First Independent Quarter.)

Verizon no longer has to distribute 45% of its wireless earnings to its former parent, which means the carrier will have significantly more cash on hand to devote to wireless this year. That said, don't expect it to be the one to kick-start a price war. (See Verizon Gets Its Freedom From Vodafone and Vodafone Agrees to $130B Verizon Stake Sale.)

"We will be rational and deliberate in how we respond to the market place," Verizon CFO Fran Shammo said on the earnings call. "We respond to our customers' requests."

TBR believes that Verizon will bounce back and end the year with the highest net additions as its Share Everything plans pick up, optimism that Shammo shared on the call. The CFO said that he expects smartphones to be a slower portion of growth for the entire industry. Instead, other facets such as M2M and tablets or features like VoLTE and multicast video will drive more usage on the network. (See Verizon VoLTE Testing Spotted and Verizon's Coming Attractions: 4G Video.)

"That's what the future holds for us," he said. "Upgrades on smartphones may increase, but it's too early to tell."

— Sarah Reedy, Senior Editor, Light Reading

(14)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Page 1 / 2   >   >>
Mitch Wagner
50%
50%
Mitch Wagner,
User Rank: Lightning
4/28/2014 | 12:08:33 PM
Re: T-Mo v Verizon
It will be really interesting to see if T-Mobile emerges as a Tier 1 carrier in the US, assuming it eludes acquisition. Or even wants to elude acquisition. 
lanbrown
50%
50%
lanbrown,
User Rank: Light Sabre
4/28/2014 | 12:05:10 PM
Re: T-Mo v Verizon
While they don't need to send 45% of the profits to Vodafone anymore, it is not like they just reached in and pulled $130 billion out of their pocket as spare change.  They issued over 1.2 billion shares of stock, which is going to hurt their EPS in future quarters.  They then paid out $6.6 billion in cash.  All in all, Verizon (not Verizon Wireless) is going to have to recoup that $130 billion, so while Verizon Wireless may not have to pay Vodafone that 45% of its profits, mama is going to be looking for her payments now.  Shall we look at Verizon; a company that has been getting rid of its local businesses, is not performing any new FiOS deployments and finally hasn't invested in its high-speed copper Internet service either.  So they are relying on their "cloud" and wireless to drive the returns.  I wouldn't expect to see big expenditures on the wireless side in the near-term.
SarahReedy
50%
50%
SarahReedy,
User Rank: Blogger
4/28/2014 | 11:48:27 AM
Re: T-Mo v Verizon
Analyst projections suggest that Verizon's subscriber numbers will be in line with its competitors by the end of the year and that they were just hit harder this quarter, but time will tell.
SarahReedy
50%
50%
SarahReedy,
User Rank: Blogger
4/28/2014 | 11:47:05 AM
Re: T-Mo v Verizon
That's true. Verizon has always been more expensive, and I think people thought they were paying for the reliability and coverage of its network -- marketing lines that AT&T and others are stealing now.
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
4/28/2014 | 10:46:45 AM
Re: T-Mo v Verizon
Yes, but if you take away our ability to draw profound conclusions from random facts, we'd be forced to just deal with humdrum reality. No fun in that.
SachinEE
0%
100%
SachinEE,
User Rank: Light Sabre
4/28/2014 | 10:39:15 AM
Re: T-Mo v Verizon
@ FakeMitchWagner, despite the recent displacement of Verizon as the leader of postpaid net additions, recorded the first time in four years; it is still too early to conclude that it is doomed. Its strong financial position at the moment still holds a door way to improvement and rectification so that it can rise up and overtake the highly potential T-Mobile. Since it no longer needs to distribute 45% of its wireless earnings, it can assign a considerable amount of money to the wireless project this year. However, lets still wait and see if the traffic to T-Mobile this year increases and if the number of Verizon customers still goes down the scale.
Mitch Wagner
50%
50%
Mitch Wagner,
User Rank: Lightning
4/28/2014 | 12:10:02 AM
Re: T-Mo v Verizon
People love a clown prince, tough-talking CEO.
Mitch Wagner
50%
50%
Mitch Wagner,
User Rank: Lightning
4/28/2014 | 12:08:50 AM
Re: T-Mo v Verizon
Do you see Verizon as being in any kind of danger, or this just normal market fluctuation?
lanbrown
50%
50%
lanbrown,
User Rank: Light Sabre
4/26/2014 | 5:45:38 PM
Re: T-Mo v Verizon
Due to their pricing.  T-Mobile and AT&T offer better pricing.  AT&T has that $160 a month for four lines; go to Verizon and get the same 4 lines and 10GB of data and it runs you $260.  How many customers will pay an extra $1200 (plus taxes) a year?
SarahReedy
50%
50%
SarahReedy,
User Rank: Blogger
4/25/2014 | 11:35:24 AM
Re: T-Mo v Verizon
Yeah, in large part, but also to AT&T, which gained more customers in the quarter. AT&T responded more aggressively to T-Mobile than Verizon did, and I guess it's paying off.
Page 1 / 2   >   >>
Flash Poll
From The Founder
Network architects aiming to upgrade their networks to support agile, open, virtualized services in the 21st century need to consider new criteria when choosing between technology suppliers.
Live Streaming Video
BTE 2015 Sponsor Keynote: HP
Dr. Prodip Sen, CTO, Network Functions Virtualization, HP
LRTV Documentaries
PSA

7|6|15   |   1:38   |   (0) comments


A public service announcement calling attention to the perils of a hyper-connected society.
LRTV Interviews
Guavus Takes Analytics on the Road

7|6|15   |   4:09   |   (0) comments


Guavus CEO Anukool Lakhina tells Light Reading CEO and founder Steve Saunders how the analytics tools developed for telcos are applicable to the transportation industry.
LRTV Custom TV
Red Hat Demo

7|2|15   |   10:53   |   (0) comments


Red Hat's Nicolas Lemieux demonstrates how Red Hat is driving innovation through open source communities.
LRTV Custom TV
Red Hat's Approach to OpenStack Adoption

7|2|15   |   5:17   |   (0) comments


Red Hat's Radhesh Balakrishnan outlines his company's open source strategy for both enterprises and telcos.
LRTV Custom TV
The New IP Goes Mobile With vEPC

7|2|15   |   1:12   |   (0) comments


Heavy Reading's Gabriel Brown discusses results of a Light Reading survey sponsored by Brocade that shows a clear commitment by mobile operators to move quickly to virtual EPC deployment.
LRTV Custom TV
Making Business Sense of SDN

7|2|15   |   1:42   |   (0) comments


Results of a Brocade-sponsored survey show that CSPs have a clear sense of SDN use cases but are wrestling with the business case. Sterling Perrin of Heavy Reading looks behind the numbers.
LRTV Custom TV
NFV Will Be Here Sooner Than You Think

7|2|15   |   2:22   |   (0) comments


Forget the usual ten-year cycle for new technologies – NFV will be a core part of CSP networks in five years, based on results of a Brocade-sponsored survey, says Heavy Reading's Caroline Chappell.
LRTV Custom TV
The New IP Gains Traction With CSPs

7|2|15   |   1:42   |   (0) comments


Roz Roseboro of Heavy Reading analyzes results of a Light Reading survey sponsored by Brocade showing that CSPs are getting serious about making the transition to the New IP era.
LRTV Custom TV
It's (Real) Time for Analytics

7|2|15   |   1:42   |   (0) comments


Heavy Reading's Jim Hodges looks at how CSPs say they plan to use analytics to deploy new services in real time as part of The New IP, based on results of a survey sponsored by Brocade.
LRTV Documentaries
IoT in Action

6|30|15   |   1:39   |   (8) comments


Two co-workers discuss the benefits of IoT technology.
LRTV Interviews
Ericsson Opens Up on OPNFV

6|30|15   |   14:16   |   (1) comment


Martin Bäckström, VP and head of industry area Datacom at Ericsson, talks to Light Reading founder and CEO Steve Saunders about the emergence of OPNFV, the importance of standards and Ericsson's OPNFV plans.
LRTV Custom TV
NetNumber Founder Discusses NFV/SDN Impact on SP Networks

6|26|15   |   4:15   |   (0) comments


NetNumber Founder Doug Ranalli examines why SPs need a new network infrastructure for service agility. While NFV and SDN are the tools, the old ways of thinking about signaling control are inhibitors. Doug provides his recommendations.
Upcoming Live Events
September 16-17, 2015, The Westin Galleria Dallas, Dallas, TX
September 29-30, 2015, The Westin Grand Müchen, Munich, Germany
October 6, 2015, The Westin Peachtree Plaza, Atlanta, GA
October 6, 2015, Westin Peachtree Plaza, Atlanta, GA
October 14-15, 2015, New Orleans Ernest N. Morial Convention Center, New Orleans, LA
November 5, 2015, Hilton Santa Clara, Santa Clara, CA
All Upcoming Live Events
Infographics
Hot Topics
Who's Feeding Fiber to LinkNYC Hotspots?
Mari Silbey, Senior Editor, Cable/Video, 6/29/2015
What's a Gigabit Good For?
Carol Wilson, Editor-at-large, 7/1/2015
Colt to Jettison Ailing IT Business
Iain Morris, News Editor, 6/30/2015
Eurobites: Activist Investor Takes Stake in AlcaLu
Paul Rainford, Assistant Editor, Europe, 6/30/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
Casa Systems has been going from strength to strength over the last couple of years. In 2013, it became the first vendor to ship an integrated CCAP device -- the ...
Cedrik Neike, SVP of Global Service Provider, Service Delivery, at Cisco, talks to Light Reading founder and CEO Steve Saunders about solving service provider customer problems in a virtualized, DevOps world, including multivendor support and the future of network procurement.
Cats with Phones