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Verizon CEO: Phone customer losses will continue in Q3

"We are still going to have a negative net adds on phones in the third quarter," Verizon CEO Hans Vestberg said Wednesday at an investor event.

The news sent Verizon's stock down by almost a full percentage point, to around $41.30 per share, in trading Wednesday.

Broadly, Vestberg's situation at Verizon appears increasingly dire. The third quarter of 2022 will mark Verizon's third full quarter of declines in the number of phone customers in its mobile business – a first in the company's history. The losses also come amid some historic customer gains among Verizon's rivals, AT&T and T-Mobile. Indeed, T-Mobile in July raised virtually all of its financial and customer expectations for 2022. Specifically, the operator now expects net postpaid customer additions of between 6 million and 6.3 million throughout 2022, an increase from its prior guidance of 5.3 million to 5.8 million.

Verizon, meantime, doesn't expect to reverse its customer losses until the fourth quarter of 2022 ar the earliest.

(Source: Kristoffer Tripplaar/Alamy Stock Photo)
(Source: Kristoffer Tripplaar/Alamy Stock Photo)

During his appearance Wednesday at the Goldman Sachs Communacopia + Technology Conference 2022 investor event, Vestberg sought to reassure investors that Verizon remains on the right course.

"We're clearly the No. 1 in the market," he said generally of Verizon's position, noting though that he's "not satisfied" with some of the company's customer metrics. "We think we compete really good in a competitive market."

Specifically, Vestberg said Verizon's new "Welcome Unlimited" pricing plan has been helping to draw new customers into the carrier. He said Verizon is seeing a rise in its gross customer additions and store traffic. "It's working," he said.

But Vestberg also warned of a rise in churn (the number of customers discontinuing service) in the third quarter due to the operator's recent inflation-sparked price increases.

He also said Verizon's ongoing 5G upgrade – a $10 billion project to add midband C-band spectrum into its network – is helping to generate more revenues. "Where we launch the C-band, we have a much higher step-up ratio in those markets, which is a good indicator that the C-band is really making a difference," he said.

Vestberg explained that Verizon continues to work to encourage its customers to subscribe to its more expensive plans, many of which offer access to speedy 5G services, and that customers are doing so in greater numbers in markets where it's offering C-band services.

"This is just making the best network even better," he said of Verizon's C-band upgrade.

Vestberg also pointed to Verizon's recent acquisition of prepaid provider TracFone. He suggested that Verizon will launch "new products into the value segment," a possible nod to Verizon's expected introduction of a new "Total by Verizon" prepaid offering.

"We're getting good traction there," Vestberg said of Verizon's prepaid effort.

Broadly, Vestberg also argued that Verizon continues to see opportunities in a wide range of areas. He said the company continues to do well in the business market, and hopes to gain traction with products ranging from mobile edge computing to private wireless. "We have more growth vectors than anyone else in the telecom market," he said.

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Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano

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