Verizon has recently experienced a significant loss of postpaid phone customers, with 289,000 subscribers leaving the carrier during the first quarter of the year. This decline represents the worst three-month period for the company since it began tracking such data. Postpaid phone customers are particularly valuable because they typically remain loyal to their carriers and tend to select more expensive plans. These customers make monthly payments after receiving services, which adds to their value for companies like Verizon.
The primary reason for this mass exodus is the increase in prices that Verizon implemented. Tony Skiadas, Verizon’s CFO, acknowledged the impact of price hikes during a conference call following the company’s earnings release. He noted that the net losses in postpaid phone customers were a direct consequence of these “recent pricing actions.” While prior price increases had minimal effects on customer retention, this time the cumulative impact was felt acutely by subscribers.
Despite the losses, Verizon remains optimistic about the future. Sowmyanarayan Sampath, the company’s consumer chief, mentioned that there has been a rebound towards the end of March and into the first half of April. The company has been focusing on consumer-first strategies, including initiatives like a price lock program, a free phone guarantee, and tailored plans for small and medium-sized businesses. However, KeyBanc Capital Markets reported that the decline was worse than analysts had predicted.
The postpaid phone churn rate during the first quarter was 0.90 percent, and while consumer wireless revenue reached $17.2 billion, this marked only a modest growth of 2.6 percent year-over-year. In terms of stock performance, Verizon’s shares rose slightly in regular and after-hours trading, moving closer to its 52-week high. The company anticipates modest growth in total wireless service revenue for the year ahead.