Published: Sat, April 22, 2017
Markets | By Lucia Cruz

Amid Competition, Verizon Loses Key Customers For First Time

It looks like Paul Marcarelli, the guy who used to say "Can you hear me now?" for Verizon but became a Sprint pitchman past year, isn't the only one who's left Verizon lately.

Verizon said it would have lost even more customers if it hadn't launched the unlimited plan.

In addition to an update on the state of wireless competition, investors will listen closely for any signals about a potential merger of T-Mobile USA and Sprint, which has always been expected. That news is one troubling development on top of other worrying ones in the company's first quarter earnings report. Verizon gained 209,000, but that was smaller than 1.1 million gained in 2015.

In all, Verizon lost 324,000 connections in Q1 2017. T-Mobile responded with other perks, such as free data when traveling overseas 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 almost six years ago.

Verizon Communications, the No. This pales with postpaid net of 640,000 a year ago and quarter upon quarter of million-plus adds before 2016.

So Verizon clearly disappointed investors, by a mile. "Verizon's churn increased from 1.03 to 1.15% of all customers in the first quarter, a strong sign that the race-to-the-bottom between the carriers is starting to see results". Retail connections totaled 113.9 million at the end of the quarter.

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Before the launch of its "Verizon Unlimited" plans in mid-February, Verizon had a retail postpaid phone net loss of 398,000; after the launch, Verizon said it added 109,000 retail postpaid phone connections. 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.

Verizon reported net income of $3.45 billion, or 84 cents per share, in the quarter ended March 31.

On Monday, John Legere leads the quarterly AT&T (T) and Verizon (VZ) bashing session known as the T-Mobile USA (TMUS) earnings call.

Chief Executive Officer Lowell McAdam is considering merger possibilities to reset the course of the company, and would be open to talks with Comcast Corp., Walt Disney Co., or CBS Corp., Bloomberg reported this week.

But MoffettNathanson analyst Craig Moffett doesn't think Verizon really wants to do a huge transformative media deal like AT&T, which has also scooped up DirecTV, has. Verizon's rivals are slated to report their latest results in coming weeks.

"The company needs a strategic transaction to support their wireless business for the long-term", Jonathan Chaplin, an analyst at New Street Research LLC, wrote in a research note Thursday.

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