Verizon’s postpaid upgrades are lower, as anticipated
Earlier, we saw that the take rate of Verizon’s (VZ) device plan improved sequentially during 4Q15. We also saw that Verizon had anticipated a better take rate of these plans during the quarter. During 4Q15, the telecom company’s postpaid upgrade rate was lower YoY (year-over-year), as the company had expected.
According to Verizon, one of the reasons for this YoY lower rate was the launch of the “refreshed” iPhone 6s and iPhone 6s Plus initiated by Apple (AAPL) in 2015 compared to that of iPhone 6 and 6 Plus in the previous year.
According to the company, the postpaid upgrade figure was at ~8.4% in 4Q15 compared to ~9.8% in 4Q14. During the 4Q15 conference call, Verizon’s CFO (chief financial officer) and executive vice president Fran Shammo commented on handsets for Apple, Samsung (SSNLF), and LG (LGEAF).
Shammo stated, “2014 was a unique year. You had a very different form factor come out from Apple, which drove a lot of traffic to that iconic device. You continue to have innovation from Samsung and LG, but we didn’t have that huge change in the handset this year that we saw a year ago. So that I think affected some of the upgrade model.”
Verizon’s smartphone penetration in 4Q15
As you can see in the above graph, Verizon’s smartphone penetration in its postpaid phone subscribers continued to grow in 4Q15. This figure was at ~83.7% in 4Q15 compared to ~78.6% in 4Q14. According to Verizon, the company had ~73 million customers in the smartphone category during 4Q15.
You may consider investing in the SPDR Dow Jones Industrial Average ETF (DIA) to take a diversified exposure to Verizon. The telecom company made up ~1.8% of DIA at the end of December 2015.