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