Verizon Wireless manages to match T-Mobile US with 2.1M net adds
Boosted by strong interest in tablet devices, Verizon Wireless managed to match fourth-quarter customer growth of smaller rival T-Mobile US while surpassing previous-year results.
Verizon Wireless said it added nearly 2.1 million net connections during the final three months of 2014, with nearly all of that growth coming from its branded postpaid services. That growth included 1.4 million tablets, with the remaining coming from phones. Verizon Wireless ended the year with 108.2 million retail connections on its network.
The latest growth was significantly stronger than the 1.65 million net customer additions posted during Q4 2013, despite an increase in customer churn from 1.27% in 2013, to 1.39% in 2014. Verizon Communications had previously hinted at the increased churn, citing increased competition during Q4.
One of the beneficiaries of that increased competition appears to be T-Mobile US, which earlier this month said it added 2.1 million net connections during Q4, including 1 million postpaid “phone” net additions; approximately 300,000 postpaid nonphone net additions; and 266,000 branded prepaid net additions, which includes the carrier’s MetroPCS brand. T-Mobile US’ wholesale operations managed to add 586,000 net connections during Q4, and the carrier noted that it held a 1.4 to 1 positive postpaid porting ratio with Verizon Wireless during the same quarter.
Verizon Wireless’ heavy reliance on tablet devices resulted in muted average revenue per account growth, which was up $1.61 year-over-year to $158.82. When factoring in a slight increase in the number of lines per account, Verizon Wireless’ average revenue per line dropped from $56.96 at the end of 2013, to $55.34 at the end of 2014. Verizon Wireless allows customers to add tablet devices to their shared data plans at cheaper rates than adding smartphones.
Financially, Verizon Wireless posted a mixed quarter as surging expenses offset revenue growth. The carrier reported an 11% year-over-year increase in total revenue to $23.4 billion for Q4. However, expenses jumped 20.5% to $17.9 billion, clipping operating income by 11.7% to $5.5 billion and corresponding operating income margins from 29.5% to 23.5%. Verizon Wireless’ earnings before interest, taxes, depreciation and amortization dropped 8% to $7.65 billion, while service margins dropped from 47% to 42%.
On the expense side, Q4 capital expenses remained flat year-over-year at $2.7 billion, while full-year capex increased 11.6% to $10.5 billion.
Verizon Wireless continues to account for a majority of Verizon’s profits, with the latest news sending the company’s stock price (VZ) down more than 2.5% in early Thursday trading.
AT&T is scheduled to announce quarterly results on Jan. 27; with Sprint and T-Mobile US expected to follow in early February.
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