Verizon Wireless rules retail

Verizon Wireless SAID it captured 2.3 million net new customers in the fourth quarter, numbers that show it continues to dominate other national carriers with its retail performance.
Cingular Wireless L.L.C., which reported last month, brought in more net customers-2.4 million customer additions-during the fourth quarter, however, fewer than 1 million of Cingular’s customers were postpaid retail customers. Meanwhile, Verizon Wireless said it gained 2.1 million postpaid customers through its own channels in the fourth quarter. The carrier increased its customer base by 15 percent year-over-year to 59.1 million customers.
Although Cingular is still the largest U.S. carrier by customer base, with 61 million subscribers, Verizon Wireless again claimed the title of largest domestic carrier by total revenues. Verizon Wireless earned $10.1 billion for the quarter, surpassing Cingular’s $9.8 billion.
Verizon Wireless also continued its industry lead in customer turnover, posting a churn rate of just 1.14 percent for the quarter, down from 1.22 percent in the same period of 2005. Retail churn stood at 1.1 percent, and retail postpaid churn came in at 0.89 percent, down from 1.02 percent in 2005’s fourth quarter.
Technology Business Research Inc. analyst Ken Hyers called the company’s 2006 “a noteworthy year in which it outperformed its peers by every important measure.”
Verizon Wireless’ average revenue per user for the quarter totaled $50.12, up 1.5 percent from 2005’s fourth quarter. At $50.78, its retail
ARPU inched slightly higher than its total ARPU.
Verizon Wireless saw its data ARPU increase by 63 percent year-over-year to $7.91. The company earned $4.5 billion in data revenues for the year, and data contributed 15.8 percent of all service revenues in Q4. The company said that more than a third of its gains came from increases in data use by business customers.
Verizon Communications Inc., which owns around 55 percent of Verizon Wireless, posted consolidated revenue of $22.6 billion for the quarter.
Gartner Inc. senior analyst Tole Hart listed the things that Verizon Wireless is doing right: positioning itself as a customer advocate by pro-rating its early termination fees, offering strong customer service, and luring customers into its stores with new services such as VZ Navigator, child handset-tracking and, soon, mobile TV. And of course, there’s the “Can You Hear Me Now?” guy.
“They’re really pounding the ads with the network coverage-and that’s the No. 1 reason people churn,” Hart added. He said that even if the new services aren’t seeing great uptake, they’re drawing customers into retail locations where Verizon Wireless can drive home its message of network reliability.
“Obviously, their messaging has really been helping them,” said Current Analysis analyst William Ho. “People remember the guy in the glasses.”
Ho said that Verizon Wireless also has added a dash of fashion to its sometimes-stodgy handset lineup with models like the Motorola Inc. Krzr and the LG Electronics Co. Ltd. Chocolate, which help keep its existing customer base happy with advanced and flashy handsets.
Tough quarter for T-Mobile USA
While Verizon Wireless was celebrating its success, T-Mobile USA Inc. reported a substantial drop in the number of net new customers that it brought in during the industry’s biggest-selling quarter.
T-Mobile USA said it added 901,000 net subscribers during the quarter, far fewer than the 1.39 million it added during the same time in 2005. Most of those additions, a total of 783,000 customers, were retail postpaid subscribers, down year-over-year from the 911,000 postpaid customers the carrier added in Q4 2005.
The reasons for T-Mobile USA’s poor performance may become clearer when the carrier reports full financials with its parent company, Deutsche Telekom, on March 1.
Ho speculated that the introduction of two new plan options-T-Mobile USA’s myFaves individual plans and myFaves family plans-might have confused consumers and made T-Mobile USA a harder sell. Also, he noted, the carrier did not do as much seasonal advertising as it has in the past.
T-Mobile USA did manage to do a better job of hanging onto its postpaid customers, though, with postpaid churn dropping from 2.3 percent in the final quarter of 2005 to 2.1 percent in the same period in 2006. Total churn was flat year-over-year at 2.9 percent.
T-Mobile USA added 3.4 million customers last year, down from the 4.4 million subscribers it added during 2005.
The carrier did improve its customer mix over the year, though, with 83 percent of its customer additions coming from the postpaid side, up from 70 percent in 2005. T-Mobile USA now has a customer base of more than 25 million customers, a 15-percent increase in its customer base during the year.
DT issued a profit warning, its second in six months.