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
Anshul Sadana answers questions from Steve Saunders, Light Reading's founder and CEO, about Arista's CloudVision, a global cloud network controller for workload orchestration and workflow automation delivering a turnkey solution for cloud networking.
Live Streaming Video
CLOUD / MANAGED SERVICES: Prepping Ethernet for the Cloud
Moderator: Ray LeMaistre Panelists: Jeremy Bye, Leonard Sheahan
Between the CEOs
Video Exclusive With Basil Alwan, Alcatel-Lucent

7|24|15   |   26:44   |   (4) comments


Basil Alwan, President of IP Routing & Transport at Alcatel-Lucent, discusses virtualization, cultural challenges, the capex crunch and more with Light Reading founder and CEO Steve Saunders.
LRTV Custom TV
VDF: Enable the Financial With Mobile Money

7|20|15   |   06:53   |   (0) comments


Ian Ravenscroft discusses how operators can expand to occupy the entire digital services value chain through service innovation.
LRTV Custom TV
Telefónica on OSS Transformation

7|20|15   |   06:01   |   (0) comments


Jose Gonzales discusses the details of Telefónica's operation transformation program.
LRTV Custom TV
Judi Achmadi on Huawei's Cloud Storage Solution

7|20|15   |   03:33   |   (0) comments


Judi discusses the key business goals of TelekomSigma's public cloud service and how Huawei's solution helps them address challenges.
LRTV Custom TV
KPN Enlightening Digital Business & IT Transformation

7|20|15   |   06:19   |   (0) comments


Rob de Beer discusses the changes that operators need to make with service innovation now coming from the Internet world.
LRTV Custom TV
Stratus Telco-Grade Cloud Solutions & NFV

7|20|15   |   07:34   |   (0) comments


Ali Kafel from Stratus Technologies addresses high-availability concerns within the telco industry with a solution that enables telcos to provide high-availability and stateful fault-tolerance using a software-based approach.
LRTV Documentaries
The Six Million Dollar Business Man

7|20|15   |   01:52   |   (0) comments


Steve Saunders, publisher. A man barely alive after an acquisition malfunction imploded the company he founded. Gentlemen, we can rebuild Light Reading. Better, faster, stronger.
Between the CEOs
CEO Chat With Anukool Lakhina, Guavus

7|20|15   |   38:51   |   (1) comment


Guavus CEO Anukool Lakhina talks to Light Reading founder and CEO Steve Saunders about the role of operational analytics in the communications services and networking sectors, particularly in relation to IoT.
LRTV Custom TV
IBM's Flash Storage With Intel QuickAssist

7|20|15   |   03:18   |   (0) comments


Intel's Bev Crair and IBM's Eric Herzog discuss how IBM's V9000 Flash Storage System has helped customers around the world. Featuring real-time compression powered by Intel QuickAssist Technology, the V9000 is a next-gen flash storage solution.
LRTV Huawei Video Resource Center
Thailand's AIS: Transforming to an FMC Operator

7|17|15   |   4:53   |   (0) comments


Saran Phaloprakarn, Senior VP of Fixed Broadband Business Management of Thailand's AIS, was a keynote speaker at the first Asia-Pacific Ultra Broadband Summit in Bangkok. In this video, he talks to Heavy Reading about transforming into an FMC (FBB+MBB+Content) operator.
LRTV Huawei Video Resource Center
Cambodia's TRC Discusses Its Plans for National Broadband

7|17|15   |   10:33   |   (0) comments


In this video, Chakyra Moa, Chairman of Telecommunication Regulator of Cambodia (TRC), talks in in-depth with Heavy Reading about the Cambodia's current telecom market and TRC's goals and expectations for the future.
LRTV Documentaries
5G Phone

7|16|15   |   2:09   |   (4) comments


A man has an opportunity to purchase the world's first working 5G phone. Imagine the possibilities...
Upcoming Live Events
September 16-17, 2015, The Westin Galleria Dallas, Dallas, TX
September 16, 2015, The Westin Galleria Dallas, Dallas, TX
September 16, 2015, The Westin Galleria Dallas, Dallas, TX
September 29-30, 2015, The Westin Grand Müchen, Munich, Germany
October 14-15, 2015, New Orleans Ernest N. Morial Convention Center, New Orleans, LA
November 5, 2015, Hilton Santa Clara, Santa Clara, CA
December 1, 2015, The Westin Times Square, New York City
All Upcoming Live Events
Infographics
Network operators start seeing savings from NFV in the first year, according to a study by Affirmed Networks and ACG.
Hot Topics
AT&T U-verse TV Hits the Skids
Alan Breznick, Cable/Video Practice Leader, 7/24/2015
Robbins Succeeds Chambers as Cisco Changes CEOs
Mitch Wagner, West Coast Bureau Chief, Light Reading, 7/27/2015
RJio to Launch Its Own 4G Devices Brand
Gagandeep Kaur, Contributing Editor, 7/27/2015
Qualcomm Wants FCC to Stay Out of LTE-U Fray
Sarah Thomas, Editorial Operations Director, 7/27/2015
Like Us on Facebook
Twitter Feed
September 22, 2015
Media Begins With “Me”
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
Basil Alwan, President of IP Routing & Transport at Alcatel-Lucent, discusses virtualization, cultural challenges, the capex crunch and more with Light Reading founder and CEO Steve Saunders.
Guavus CEO Anukool Lakhina talks to Light Reading founder and CEO Steve Saunders about the role of operational analytics in the communications services and networking sectors, particularly in relation to IoT.
Cats with Phones
Distract-a-Cat Click Here
The vibrate function makes for a useful cat distraction.