Verizon CFO sticks to guns that carrier will not dive back into unlimited data fracas
Verizon Wireless remains down on bringing back an “unlimited” data option for customers, despite ongoing promotion of such offers from rivals.
Verizon Communications CFO Fran Shammo, speaking at this week’s Deutsche Bank Media, Internet and Telecom Conference, followed up comments from a similar event last week in noting the carrier had no interest in brining back an unlimited data option for its LTE network.
“I have been pretty public saying unlimited model does not work in an LTE environment,” Shammo said when questioned on the topic.
Shammo downplayed the recent boost by competitors in highlighting unlimited data options, noting such moves are likely temporary and only being used to gain ground in the market.
“Look, this industry has always been competition comes in and out with promos,” Shammo explained. “That is just the nature of what we deal with on a quarterly-to-quarterly basis. A lot of the things that are out in the marketplace today are promos. These are not permanent pricing type things so you have to be careful how much you react to different competitor promotions and of course we run our own promotions. So the promotional activity will always be there and I don’t think it is more intense than it was, it is not like we are seeing what happened a couple of years ago where the entire industry was reset in pricing. I don’t see that. I just see this as business promotional activity to try to gain ground to get some maybe incremental net adds here and there.”
Instead, Shammo said Verizon Wireless will remain stable in terms of pricing moves as it looks to stabilize revenues.
“But I think for Verizon what we have done is we will do our promos, but we are steady as she goes and we are not going to respond to everything in the marketplace if we don’t think that we need to respond to,” Shammo said. “It is going to be a very logical approach because look, at the end of the day I need to grow top line and I need to grow profitability and I need to generate cash. And some of these promos you see out there they may generate growth, but they are certainly not generating cash. So they are short term and so we will ride that out.”
Verizon Wireless posted a 1.2% increase in revenues for the fourth quarter of last year compared to results from the previous year, highlighted by a 27.9% increase in equipment revenues offsetting a 5.6% drop in service revenues. For the full year, wireless revenues increased 4.6% to $91.7 billion, with service revenues down 3.1% and equipment revenues increasing 54.4%. This discrepancy was expected as Verizon Wireless swapped lower monthly service rates for customers paying full price for their devices.
Expenses were a mixed bag, as Q4 expenses dropped 5.6% year-over-year, while full year operating expenses increased 1.3%. The net result was a 23.6% increase in Q4 operating income to $6.8 billion, while full year operating income increased a more modest 12% to $30 billion.
Shammo’s most recent comments echoed those made last week at the Morgan Stanley Technology, Media and Telecom Conference.
Verizon Wireless in 2011 stopped offering unlimited data plans to new customers, and last year increased pricing on grandfathered unlimited data plans by $20 per month. Some analysts have wondered how much longer the carrier can hold out in light of recent moves by competitors.
Verizon Wireless rival AT&T Mobility recently relaunched an unlimited data offer for smartphone customers, though the promotion is tied to customers also signing up for the AT&T’s DirecTV service.
Sprint last month slashed pricing on its unlimited data plans for smartphones, now offering up to four lines of unlimited services for $150 per month. The Sprint promotion lined up with one launched earlier this month by T-Mobile US offering similar unlimited services at the same $150 per month price point. Both carriers reserve the right to limit data speeds for unlimited data customers once they reach 23 GB of data usage per month.
Verizon Wireless last month did bolster its data buckets, offering new and existing customers 2 GB of “bonus data” per month for each phone line of service accessing a data bucket of at least 12 GB, also known as “XL” in the carrier’s sizing parlance. The carrier earlier this year rolled out a similar 2 GB bonus promotion tied to its Go90 video service, providing an incentive for its customers to download the application.
Despite claims it wants to remain above the competitive fray, Verizon Wireless is not completely immune from following competitor moves having late last year rolled out an offer to pay up to $650 in credit for customers willing to switch from a rival. AT&T Mobility and T-Mobile US kicked off such reimbursement programs in early 2014, with Sprint eventually following.
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