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Verizon Upsets Investors with Postpaid Phone Customer Losses

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Customer additions of Verizon in Q1

In Q1 2019, Verizon (VZ) added net 1.17 million retail customers, driven by 1.13 million retail postpaid customer additions.

Verizon lost net 115,000 retail customers, gaining 61,000 retail postpaid customers and losing 176,000 retail prepaid customers in the quarter. The carrier lost around 156,000 tablet customers and 44,000 postpaid phone customers in the quarter, which was offset by wearable customer gains of 261,000. Verizon also reported postpaid smartphone net additions of 174,000.

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Postpaid phone subscribers

Verizon lost around 44,000 postpaid phone subscribers in the first quarter, more than analysts’ estimates of a loss of 25,000 customers and 653,000 customer additions in the fourth quarter of 2018, due to stiff competition in the wireless carrier industry and the ongoing shift from linear video offerings to over-the-top (or OTT) offerings.

In comparison, AT&T (T) added a net 134,000 postpaid phone subscribers while Sprint (S) lost 26,000 postpaid phone customers in the December-ending quarter. T-Mobile (TMUS), however, added the most postpaid phone subscribers of 1 million in the fourth quarter.

Higher-than-expected losses in Verizon’s postpaid phone customers have disappointed investors as postpaid customers are considered to be more profitable to mobile operators than prepaid customers.

Churn rate 

Verizon’s postpaid phone churn rate was 0.84% in the first quarter, compared to 0.80% in the prior-year quarter. Though the postpaid phone churn rate increased year-over-year, the company still managed to produce retail postpaid phone churn of less than 0.90% in the past 16 consecutive quarters.

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