Inside Verizon’s Postpaid Phone Net Additions

While Sprint (S) and T-Mobile (TMUS) have recently gained a chunk of postpaid phone subscribers, hurting Verizon Communications’ (VZ) Wireless segment in 4Q16, Verizon’s Wireless margin pressure can also be explained by the company’s aggressive promotional activity and heavy advertising. This, in turn, seems to indicate that Verizon is determined to rebound from postpaid phone losses seen in 3Q16.

Verizon’s postpaid phone net subscriber additions totaled ~167,000 in 4Q16, up from a loss of ~36,000 subscribers in 3Q16. Verizon continues to improve the quality of its subscriber base. Specifically, Verizon added ~552,000 new 4G smartphones during the last quarter of 2016, partially offset by a net decline in 3G smartphones, resulting in ~456,000 net new smartphones.

By comparison, AT&T (T) lost 67,000 postpaid phone subscribers in 4Q16. However, Sprint’s postpaid phone net additions totaled 368,000 in calendar 4Q16. Meanwhile, according to T-Mobile’s preliminary report on January 5, 2017, the company reported ~933,000 postpaid phone net additions during the last quarter of 2016.

Postpaid phone users, especially the smartphone users, are of particular value for mobile carriers. Users of smartphones such as Google’s (GOOG) Android or Apple’s (AAPL) iPhone tend to have relatively high data usage, and so they are the most lucrative customers for telecom companies.