Boston, MA 04/25/2014 (wallstreetpr) – Verizon Communications Inc. (NYSE:VZ) reported first quarter financial data on Thursday, where it exceeded analysts’ estimates by accounting addition of net 539,000 postpaid users, but lost handset customers.
Intense Competition
Verizon’s financial results come in an excessively competed environment, where carriers are employing aggressive measure to rake subscribers from their rivals. One of such lucrative promotion was started by T-Mobile US Inc (NYSE:TMUS) US in January, where it committed to cover fees that other carriers impose on an early end of the contract. While, T-Mobile targeted Sprint Corporation (NYSE:S) and AT&T Inc. (NYSE:T), it seems that Verizon is jolted too. Verizon reported a net gain of 634,000 subscribers in tablets, AT&T added 449,000 in tablets, implying that Verizon’s loss is AT&T’s gain. This is the first time, when Verizon has failed to add fewer subscribers than its rival. Postpaid churn metric, which measures that how many customers quit, rose to 1.07% from that of 1.01% in the previous year.
No More Price Cuts Planned
The loss of handset subscribers come at a time when Verizon Communications Inc. (NYSE:VZ)’s profit grew two-fold to $3.95 billion in the first quarter. Its revenue increased 4.8% to $30.8 billion. During the first quarter, the company successfully completed the acquisition worth $130 billion of its 45% Verizon Wireless. The company’s CFO, Fran Shammo, mentioned that it lost subscribers mainly during the period in between January to February. He added that the has already taken measure to address the situation by cutting data plan rates to the extent of 12.5%. Resultantly, the company saw a positive subscriber growth in March.
While other carriers are alluring subscribers with huge rate cuts, Shammo makes it clear that Verizon does not intend to bring further price adjustments. As per an analyst, Craig Moffett, at MoffettNathanson, Verizon’s loss of customers is shocking as Verizon Communications Inc. (NYSE:VZ) has been a growth leader, ever since it got iPhone.
