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Verizon Gets a Dab of Weakness

Verizon Communications Inc. (NYSE: VZ) has had to disconnect a higher than normal number of wireless customers who couldn't pay their bills, the company's CFO Doreen Toben told analysts at a Bear Stearns & Co. Inc. conference this morning.

These cases, located in the Midwest, were "relatively insignificant" and won't affect Verizon's earnings, she said. Verizon has been insisting all year that its business is healthy despite the weakening U.S. economy. (See Verizon Doesn't Fear Economy's Slump.)

AT&T Inc. (NYSE: T) CEO Randall Stephenson made similar comments in January when he remarked that his company had disconnected an unusually high number of wireline customers for the same reason. (See Whoa Mama Bell!)

Perhaps of more concern were Toben's remarks that Verizon sought more prepaid customers in the fourth quarter. Verizon has always been quick to point out that the vast majority of its wireless customers are postpaid subscribers. They're riskier than prepaid customers but typically pay higher bills and are locked into long-term contracts.

The fact that Verizon has been looking to add more prepaid subscribers could be a sign it is trying to hedge itself against further weakness in its postpaid customer base. The prepaid model is popular in more economically weak markets such as India.

Concerns of weakness aside, Toben said she expects double-digit annual revenue growth for the wireless unit during the next few years.

Separately, she tried to quell concerns that Verizon's new $100 unlimited calling plan would kick off a price war, saying she expects the plan to boost results and that the number of customers upgrading from a $79.99 plan would offset those who downgraded from plans worth more than $100.

Shares of Verizon are down 53 cents (1.5 percent) at $34.55 in midday trading.

— Raymond McConville, Reporter, Light Reading

lamdaswavelength 12/5/2012 | 3:45:44 PM
re: Verizon Gets a Dab of Weakness The market is competitive most products lines are commodotised so what's the solution? consolidate, buy out competitors and so on. e.g. Verizon/Sprint rumour.

And then, eventually, they'll be spun off again

RBOCs and AT&T and of course there was Bell labs, Lucent blah, blah. Lots of history.

http://en.wikipedia.org/wiki/B...

Spin offs, consolidate, spin off, divest, merge etc, etc.


Death Eternal 12/5/2012 | 3:45:44 PM
re: Verizon Gets a Dab of Weakness instead of a sign of weakness in verizon,
might this be better recognized as a sign of weakness in american economy?
the frequent use of the word economy as a synonym for sound *(read: conservative) use of financial resources (instead of the more appropriate generic usage as a noun with no coloration left or right)
perhaps these two ought to go their separate ways once, for good, and for all...
relieving americans (and disabusing us finally) of the notions that we are inherently sensible and inevitably invulnerable...
let the company work out its own problems and stop trying to sink them as they try to swim...
easy enough to be a moron and a bully...
what have you done for me, lately, "light reading"?
lamdaswavelength 12/5/2012 | 3:45:43 PM
re: Verizon Gets a Dab of Weakness And taking you back to one of my earlier posts:

http://www.nortel.com/corporat...

lamdaswavelength 12/5/2012 | 3:45:43 PM
re: Verizon Gets a Dab of Weakness I thought the Alcatel-Lucent merger was a bit of an odd one tho.
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