Price War With AT&T, T-Mobile Will Dent Verizon’s Q4 Profits
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."
Image Source: Flickr (Robert Scoble)
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.