uploads///Telecom Verizon EDGE take rate QE

Verizon Edge penetration rate doubles in 4Q14

By

Dec. 4 2020, Updated 10:52 a.m. ET

Rising Edge penetration

According to Verizon Communications (VZ), its Edge penetration rate increased significantly during the fourth quarter. Edge is the installment plan for postpaid users. In 3Q14, the company had the lowest adoption of the installment plan among national carriers. Higher Edge penetration should positively impact Verizon’s 4Q14 earnings.

Article continues below advertisement

Edge program

Verizon offers Edge to both new and existing customers. Edge gives customers the option of owning a device without paying any upfront equipment cost, subject to credit requirements. The customer can pay the cost of the device in monthly installments over a period of two years.

For example, you can buy an Apple (AAPL) iPhone 6 at a price of $649.99 by paying 24 monthly installments of $27.08. Edge also gives customers more choices in terms of upgrading devices. They can upgrade the device anytime after the first 30 days of the subscription to the plan. However, customers have to pay three-fourths of the device’s cost before they can upgrade to a new device.

Adoption of installment plans

Unlike other national carriers, Verizon had limited success selling its Edge installment plan to customers. This began to change at the end of 3Q14. As you can see in the above chart, at the end of 3Q14, the company’s Edge penetration was 12%. In the same period, its peers such as AT&T (T) and Sprint (S) had much higher adoption rates of their installment plans. The penetration of AT&T’s Next plan was 52%, while Sprint’s Easy Pay plan was 30%. T-Mobile (TMUS) doesn’t report figures for its Jump installment plan. Please read Telecom biz looks to boost installment plans to know more about adoption of installment plans among national carriers.

Management guidance on Edge in 4Q14

In the third quarter, Verizon gave the guidance on a 24% adoption rate of its Edge program. This is double Edge’s 3Q14 figure. A higher adoption rate will benefit the company directly in the form of increased profitability. Installment plans contribute more to telecom companies’ profits than traditional subsidy plans do with their high subsidy costs. To learn more, please read Why the Next model’s more valuable to AT&T than the subsidy model.

Advertisement

Latest AT&T Inc News and Updates

    Market Realist Logo

    © Copyright 2022 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.