Sometimes when you go against industry trends it works out for you and sometimes it flops. Verizon’s move to avoid the raise to bottom has now been confirmed as a flop.
In the first six weeks of 2017, as the telco giant attempted to resist industry movements towards unlimited data plans, its wireless business lost a total of 398,000 retail postpaid. It doesn’t matter how big you are, those numbers have got to hurt. That said, credit has to be given to the team, following the launch of its unlimited plan it clawed back 109,000, leaving the shortage at a meagre 289,000. Not a bad recovery, but still a painful quarter.
“Our first-quarter results again demonstrated that customers value a high-quality network experience,” CEO Lowell McAdam said with a brave face. “To build on our loyal customer base and the third-party recognition we have received for network leadership, we extended our wireless and fibre network capabilities, began offering an unlimited pricing option and expanded our opportunities in new markets.”
When looking at the numbers for the wireless business, the story does not appear to get any better despite the enthusiasm of McAdam. Revenues totalled $20.9 billion in first-quarter 2017 for the business unit, representing a year-on-year decline of 5.1%. Wireline was a little bit better, only declining 0.6% to $7.9 billion. On perhaps a more positive note, the wireless team does seem to be moving away from the expensive subsidized business model, as non-subsidized service pricing plan customers accounted for 72% of postpaid contracts.
It’s a small glimmer of hope for the US’ largest wireless brand, however T-Mobile is still gaining on the giant quarter-on-quarter, perhaps due to the fact it is still offering a better deal. Verizon and co. are attempting to battle Legere’s army by matching the unlimited offers, but from a data throttling perspective, T-Mobile’s contracts are still more attractive. On the Verizon plan, speeds are throttled once the 22GB line has been hit, though for T-Mobile this line is raised to 30GB.
The world doesn’t seem to be so rosy for the colossus anymore, and it would appear McAdam is starting to look at his options to form a new strategy which wouldn’t result in a direct head-to-head battle with the market disruptor. According to Bloomberg, Verizon is considering merger options to offer an alternative strategy, but McAdam isn’t fussy.
“But I’d also tell you there isn’t much that I wouldn’t have a discussion around if somebody came and said ‘Here’s a compelling reason why we ought to put the businesses together,” McAdam said in an interview.
There certainly have been a lot of rumours around Comcast, due to the fibre assets, but Disney and CBS have had their turn in the rumour mill; who knows who is going to be next on the list as the Verizon CEO seems happy to shack up with anyone.
With Amazon and Google launching smart home initiatives, have the telcos missed out on their chance to cash in on this market?
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