Published: Fri, April 21, 2017
Markets | By Erika Turner

Why Verizon Is Losing More Cellphone Customers Than Ever

Why Verizon Is Losing More Cellphone Customers Than Ever

Notably, Verizon reported a net loss of 307,000 retail postpaid connections - those that pay for service on a monthly contract - including 289,000 phone losses.

On Thursday, April 20, 2017, Verizon announced its profit sunk 20 percent in its first quarter as it lost wireless customers. This measure was taken in a bid to defeat the appeal of the same kind of offers from Sprint and T-Mobile.

Verizon shares are down 6% over the last 12 months, a period in which rival AT&T has gained 3.4% and T-Mobile has soared 63%. Growth in the wireless subscribers has slowed down now that most Americans have a cellphone. Considering that analysts expected Verizon to add almost 250,000 customers in the first quarter, that's dire.

The move into unlimited data marked an about-face for Verizon, which steadfastly has refused to offer unlimited data plans for fear of obliterating the bottom line, choosing instead to focus on network quality for the highest-paying customers. But once the new plans became available, they helped blunt those losses by bringing in about 110,000 new subscribers, Verizon said.

Verizon's retail postpaid connections base grew 1.2 percent year over year to 108.5 million, and retail prepaid connections grew 0.5 percent to 5.4 million.

But aggressive moves by smaller carriers to build out their networks are paying off, said Roger Entner, an industry analyst with Recon Analytics, meaning that such companies as T-Mobile are chipping away at Verizon's network advantage. Verizon blamed the decline on a drop in revenue received from overages, the cost of promoting the business, and a decline in the number of postpaid customers.

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Shares of Verizon fell 53 cents, or 1 percent, to close Thursday at $48.41.

Capital expenditures totaled $3.1 billion in first-quarter 2017, as Verizon maintained its network leadership.

"We're confident in executing our strategy organically, but if there's the right opportunity out there to accelerate the strategy inorganically in a way that adds holder value, we're always looking at those opportunities", said Verizon Chief Financial Officer Matt Ellis on a call with analysts. The company also reported that earnings and sales for its latest quarter missed Wall Street's forecasts.

According to Thomson Reuters I/B/E/S, analysts had expected adjusted earnings per share of 99 cents and revenue of $30.77 billion.

Revenues of $29.8bn were down 7.3 per cent from Q1 2016.

For its Fios service, which delivers internet and TV to people's homes, Verizon added 35,000 internet subscribers, lost 13,000 cable subscribers and lost 8,000 voice subscribers. Something seems to have changed in 2017, though, as the company just reported what may be their worst quarter ever, a quarter that was actually on pace to be even worse if not for the introduction of Verizon Unlimited.

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