VOL. 132 | NO. 80 | Friday, April 21, 2017
Amid Competition, Verizon Loses Key Customers for First Time
By TALI ARBEL and JOSEPH PISANI, Associated Press
NEW YORK (AP) – Verizon, the once-unstoppable cellphone leader in the U.S., lost key wireless customers for the first time, even as it brought back unlimited data plans to counter smaller rivals.
In the first three months of the year, Verizon lost 307,000 wireless subscribers who are billed each month, the more lucrative kind of wireless customer. MoffettNathanson Research says it's the first-ever lost in that category, which covers phones, tablets, smartwatches and other connections. For cellphones alone, Verizon lost 289,000 customers. Verizon said it would have lost even more customers if it hadn't launched the unlimited plan.
Total wireless revenue fell 5 percent to $20.9 billion, because of fewer customers and less money coming from the fees Verizon charges when customers go over their data limits. Unlimited plans don't have those fees.
Growth in the wireless subscribers has slowed down now that most Americans have a cellphone. Instead, companies have been poaching customers from each other with lower prices and offers to pay people to switch.
Last year, T-Mobile gained 3.3 million of the lucrative phone customers – "post-paid" in industry jargon – while Sprint gained 910,000, according to MoffettNathanson. Much of that came at the expense of AT&T, which lost 1.2 million last year. Verizon gained 209,000, but that was smaller than 1.1 million gained in 2015.
Verizon has had quarterly losses in post-paid phone customers before, but not when other wireless connections are included.
Verizon has been able to retain customers thanks to its high-quality network. While Sprint and T-Mobile have gotten better, they don't have as extensive a reach into the most rural parts of the country. T-Mobile responded with other perks, such as free data when traveling abroad and when watching video from major streaming services in the U.S. T-Mobile ultimately turned to unlimited plans, as did Sprint, forcing Verizon to resurrect something it had ditched nearly six years ago.
Verizon's unlimited plans are more expensive than options from Sprint and T-Mobile, so the company will have to show it still has the ability to draw customers willing to pay more for a better network. AT&T's unlimited plan costs about the same as Verizon's; a cheaper unlimited option has fewer features.
The competitive wireless market has led to speculation that Verizon will try to buy another company to broaden its business. AT&T has purchased satellite TV company DirecTV and is trying to buy Time Warner, the entertainment conglomerate behind CNN, TBS and HBO. Verizon has purchased AOL and is wrapping up a deal for Yahoo in an attempt to build a digital ad and media business, efforts that so far have not brought much competition to Facebook and Google. Revenue from Verizon's AOL unit fell 4 percent in the first quarter.
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.
Verizon Communications Inc.'s profit fell 20 percent, to $3.45 billion, or 84 cents per share, in the first quarter. Analysts surveyed by Zacks Investment Research called for earnings of 98 cents per share.
Revenue fell 7 percent to $29.81 billion, missing analyst expectations of $30.5 billion, according to Zacks.
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