Verizon’s Edge program needs a turnaround

In Part 3 of this series, we discovered how AT&T Inc.’s (T) and Sprint Corporation’s (S) installment plan penetration is much better than Verizon Communications Inc.’s (VZ). Although T-Mobile US, Inc. (TMUS) doesn’t report this metric, we can safely assume that its installment plan penetration rate is much better than Verizon’s because it pioneered the installment plan last year.

Also in Part 3, we suggested that AT&T and Sprint benefit financially from penetration as much as customers benefit from the flexibility of installment plans.

Verizon sells its installment plan under the brand name Verizon Edge. As the chart above shows, Verizon Edge penetration declined from 18% in 2Q14 to 12% in 3Q14.

If you’ll recall, Market Realist looked at the reasons why adoption of Verizon’s Edge program increased at a slow rate in 2Q14. Management had optimistically projected a 30% increase in the program’s penetration rate by the end of second quarter. Lack of promotion was blamed for this projection’s failure.

During its 3Q14 earnings call, management asserted that the company’s now shored up its marketing efforts related to the Edge program. Verizon now expects adoption to double, increasing to 24% in the fourth quarter.

To gain exposure to Verizon, you can consider exchange-traded funds, or ETFs, such as the Sector SPDR Trust SBI Interest (XLK).