Verizon on customer attrition in Wireless
During the MoffettNathanson Media and Communications Summit 2016 held on May 19, 2016, Fran Shammo, Verizon’s executive vice president and CFO, discussed a particular category of wireless customers that the carrier is losing at a relatively high rate.
Shammo noted, “So, churn is still extremely low. And even within that category what is putting pressure on that category is the tablet churn, because our tablet churn is going up because of that free tablet that I said when you give something to someone for free they don’t really value the tablet. So after the two-year commitment is up they are taking it off the network.”
Regarding the relatively valuable phone customers, Shammo added, “But our phone churn rate is actually even performing much better than we had expected. So, the continued retention is there.”
Verizon’s postpaid retention among peers in 1Q16
Among the top four US wireless players, Verizon maintained the lowest postpaid churn at ~0.96% in 1Q16. AT&T followed Verizon in this parameter with a postpaid churn of ~1.1% in domestic operations during the quarter. Meanwhile, T-Mobile’s (TMUS) churn was ~1.5% for the quarter. Sprint’s (S) postpaid churn was ~1.7% in that quarter.
Instead of investing directly in Verizon’s stock, you may consider taking a diversified exposure to the company by investing in the SPDR Dow Jones Industrial Average ETF (DIA). The telecom giant made up ~2% of DIA at the end of April 2016. Verizon was the only telecom player held by this ETF.