Verizon’s Edge plan in 2Q15
In the last part, we learned about the moderate YoY (year-over-year) growth in Verizon’s (VZ) wireless revenue in 2Q15. We also learned that the segment’s service revenue fell marginally YoY during the quarter. These are typically the biggest components of carriers’ wireless revenue. We learned about the surge in Verizon’s equipment revenue during 2Q15.
The growth in equipment revenue was driven by the rising adoption of Verizon’s Edge plan. The plan’s popularity continued to grow during 2Q15. The phone activations on Verizon’s Edge plan rose from ~18% in 2Q14 to ~49% in 2Q15.
Take rates are expected to grow
In the last nine months, the surge in the adoption of Verizon’s Edge plan has been significant each quarter. As we can see in the above chart, the proportion of customers choosing Verizon’s Edge plan has risen significantly each quarter after 3Q14. However, Verizon expects the plan’s take rate to rise to ~60% in 3Q15.
Even AT&T’s—the second largest US wireless carrier—Next plan had a penetration of ~37% in the total smartphone base in 2Q15. However, Verizon’s Edge penetration in its total postpaid phone subscribers was only ~16%. Smartphones represented ~81.20% of Verizon’s postpaid phones in 2Q15.
You can get diversified exposure to Verizon by investing in the iShares Russell 1000 Growth ETF (IWF). IWF held ~1.60% in the telecom company on July 31, 2015.
However, if you want to diversify your risk originating from exposure to Verizon, you can consider investing in the iShares Russell 1000 ETF (IWB). Verizon contributed to ~0.90% of IWB’s holdings on the same date.