Verizon’s Postpaid Phone Churn Rate Could Rise in Fourth Quarter

In the previous part of this series, we looked at Verizon’s (VZ) prepaid subscriber net additions trend over the past few quarters. Now in this article, we’ll discuss Verizon’s customer retention metric, the churn rate. Verizon is the leading US wireless service provider with the largest retail postpaid market share and the lowest postpaid phone churn rate.

Verizon has managed to report a retail postpaid phone churn rate of 0.80% or better for the last six quarters, with the third quarter’s churn rate coming in at 0.80%. The telecom company attributed this to the increased subscriber satisfaction and loyalty resulting from ongoing improvements to its network quality and customer service. In addition, Verizon’s management expects its retail postpaid phone churn rate to increase seasonally during the fourth quarter.

If we compare the top mobile operators in the US, we find that AT&T (T) reported a postpaid phone churn rate of 0.93% in the third quarter. Meanwhile, Sprint (S) posted a postpaid phone customer retention rate of 1.73% in the second quarter of fiscal 2018 (quarter ended in September). T-Mobile’s (TMUS) postpaid phone churn rate of 1.02% in the third quarter improved from 1.23% in the year-ago quarter.

The lower churn rate helps mobile operators save acquisition costs related to acquiring a customer, which helps them expand their operating margins.