Price War With AT&T, T-Mobile Will Dent Verizon’s Q4 Profits
Verizon is putting its brave face on and remaining positive about future growth opportunities as it deals with increasingly aggressive competitors in the wireless space. Without feeding the media and analysts too much real data to chew on, Verizon spoke in vague terms, saying that it sees "strong momentum for wireless customer growth" heading into the fourth quarter of 2014, along with "very strong customer demand" for 4G devices on its More Everything shared data plans.
According to Verizon, retail postpaid gross additions are higher both sequentially and year-over-year. In addition, new device launches are leading to "significant customer phone upgrades." If you're keeping count so far, that's two "strongs" and one "significant."
We reached out to Vague von Vaguerson, President and CEO of Vague Analytics, for his thoughts on Verizon's report, and he told us it's too early to tell, though voiced concern over the lack of financial descriptors such as "bodacious" and "rock solid."
Kidding aside, Verizon's report wasn't completely devoid of data. The wireless company did note that its retail postpaid gross additions are on pace to total as much as 9.5 percent of its postpaid customer base by the end of the quarter. Verizon also noted that the percentage of customers choosing the Verizon Edge equipment-installment plan option so far in Q4 is tracking to 24 percent, or double the rate of Q3.
Why the jump? Verizon didn't say, though we suspect it has to do with the wireless company's competitors pushing similar plans, such as AT&T Next and T-Mobile's Uncarrier initiative. Indeed, Verizon noted losing a larger number of customers due to the competitive landscape, especially during this holiday season. In addition, the pricing battle between America's top wireless carriers has eroded Verizon's profit margins.
"The company expects that the fourth-quarter impacts of its promotional offers, together with the strong customer volumes this quarter, will put short-term pressure on its wireless segment (profit margins) and earnings per share," Verizon said.
Verizon's competition has been issuing a constant barrage of new price plans and promotions to lure customers, though you have to wonder how long the pricing war can last.
According to Verizon, retail postpaid gross additions are higher both sequentially and year-over-year. In addition, new device launches are leading to "significant customer phone upgrades." If you're keeping count so far, that's two "strongs" and one "significant."
We reached out to Vague von Vaguerson, President and CEO of Vague Analytics, for his thoughts on Verizon's report, and he told us it's too early to tell, though voiced concern over the lack of financial descriptors such as "bodacious" and "rock solid."
Kidding aside, Verizon's report wasn't completely devoid of data. The wireless company did note that its retail postpaid gross additions are on pace to total as much as 9.5 percent of its postpaid customer base by the end of the quarter. Verizon also noted that the percentage of customers choosing the Verizon Edge equipment-installment plan option so far in Q4 is tracking to 24 percent, or double the rate of Q3.
Why the jump? Verizon didn't say, though we suspect it has to do with the wireless company's competitors pushing similar plans, such as AT&T Next and T-Mobile's Uncarrier initiative. Indeed, Verizon noted losing a larger number of customers due to the competitive landscape, especially during this holiday season. In addition, the pricing battle between America's top wireless carriers has eroded Verizon's profit margins.
"The company expects that the fourth-quarter impacts of its promotional offers, together with the strong customer volumes this quarter, will put short-term pressure on its wireless segment (profit margins) and earnings per share," Verizon said.
Verizon's competition has been issuing a constant barrage of new price plans and promotions to lure customers, though you have to wonder how long the pricing war can last.
