VERIZON WIRELESS ADDED 2.1 million customers during the third quarter, just slightly behind numbers posted by rival AT&T Mobility.
In organic growth, Verizon added 1.5 million retail net customer additions, essentially all postpaid. AT&T Mobility gained 1.7 million customers in postpaid additions – the most customers to join the carrier in one quarter.
Verizon Wireless’ total churn reached 1.33% and postpaid churn was even lower, at 1.03%, meaning most Verizon Wireless customers remain faithful to the carrier. However, the total churn figure of 1.33% is higher than normal for the carrier, said Bill Ho, an analyst with Current Analysis. Those subscribers may have switched to AT&T Mobility and its iconic iPhone handset.
“Verizon had been the king of low churn for many, many quarters,” he said. “Churn had always been 1.2(%), 1.1(%) and if you look at the graph, it spiked up in Q3. They usually have seasonality in the third quarter, but I think part of it might have been the iPhone.”
AT&T reported 1.7% in total churn and 1.2% in postpaid churn amid 2.4 million iPhone activations in Q3.
So is Verizon Wireless is kicking itself for not agreeing to offer the iPhone?
Susan Welsh de Grimaldo, an analyst with Strategy Analytics, said the iPhone helped out Verizon Wireless even if it wasn’t on the shelves.
“Verizon is benefitting from the overall growth in mobile data over smartphones that has been buoyed by the iPhone phenomena,” she said. “[Verizon] benefits from the overall boost the iPhone has given to consumer awareness and interest in mobile data and the competitive push in the smartphone area driven by iPhone to create more intuitive, user-friendly devices to drive data consumption.”
Verizon Wireless’ revenues reached $12.7 billion, up 12.5% year-over-year, which the carrier credited to its average monthly revenue per user (ARPU). The carrier reported ARPU of $52.18. Data revenues were also up, by 42.5%.
Of Verizon Wireless’ 2.1 million new customers, 630,000 of them came from the carrier’s acquisition of Rural Cellular Corp., putting the carrier’s total customer count at 70.8 million. AT&T Mobility currently hosts 74.9 million subscribers.
Looking ahead
However, those roles could switch by the fourth quarter, should Verizon Wireless’ $28.1 billion acquisition of Alltel Communications L.L.C. go through. The acquisition would add Alltel’s 13 million subscribers to Verizon Wireless’ total.
The Department of Justice approved the merger, subject to the company divesting wireless assets in 100 markets encompassing 22 states, and the Federal Communications Commission may stamp its approval on the purchase this week.
If approved, Verizon Wireless will see that huge jump in net adds in early 2009, making the first quarter likely a successful one for the carrier, noted Bill Ho, an analyst with Current Analysis.
“This is the chance of a lifetime for Verizon,” he said.
Looking in the crystal ball of AT&T’s future, Ho said the big iPhone effect may have already happened. Going forward, AT&T Mobility must draw in people who considered an iPhone purchase, but have yet to commit.
“The early guys have already come to pass,” he said. “But, those people who [were stuck] in a contract- will they pull those people, the ones who were on the fence?”
Handset selection will be key to a successful fourth quarter for any carrier, Ho commented.
