Holiday Deals Squeeze Verizon's Q4 Wireless Margins

Verizon is warning that holiday pricing pressures will hit its wireless margins in the fourth quarter.

Verizon Communications Inc. (NYSE: VZ) didn't give a specific figure for its fourth-quarter margin in a statement, but like the rest of the major US operators, however, it is offering different long-term plans and short-term offers in a bid to win customers in this cut-throat market.

The company expects that "fourth-quarter impacts of its promotional offers, together with the strong customer volumes this quarter, will put short-term pressure on its wireless segment" and affect its service margins. The company's margin for wireless earnings before interest, tax, depreciation and amortization was 47% in the fourth quarter of 2013.

The New York-based service provider also notes that many more customers are taking up its "Edge" financing plan for new handsets. "The percentage of customers choosing the Verizon Edge equipment-installment plan option so far in fourth-quarter 2014 is tracking to 24%, or double the rate of third-quarter 2014, which was approximately 12% of total phone activations," Verizon says in the statement.

Verizon's share price was down by 2.7% to $47.60 in pre-market trading early Tuesday morning.

— Dan Jones, Mobile Editor, Light Reading

kq4ym 12/10/2014 | 10:08:38 AM
Re: Feeling a slight pinch It does seem the ads I'm noticing lately are all promoting selling larger bundles to multiple users. And trying to convince customers "their" deal is better than the competition. I wonder how this final quarter financials compares to previous year's? It would seem holiday promotions generally will generate more sales but a smaller profit margin.
KBode 12/9/2014 | 1:08:02 PM
Feeling a slight pinch Notable, since IIRC in March the CEO stated that absolutely nothing was happening out of the ordinary. I knew they were feeling the pinch last month when I got a call out of the blue telling me I could double my current 4 GB allotment to 8 GB for the same price -- permanently. Before that, a lot of AT&T and Verizon's promotions had seemed highly cosmetic in nature -- most cutting higher-cost plan prices to try and upsell users from cheaper plans.
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