Verizon set to pressure rivals in Q2 customer growth

Verizon Wireless looks set to put some pressure on its rivals in terms of second quarter performance, as the nation’s largest carrier said it added 1.4 million net customers, boosted by record tablet activations.
In an interview with CNBC, Verizon Communications CEO Lowell McAdam announced the results, which were about double of what analysts were expecting, and would be a 40% increase compared with the second quarter of 2013. The carrier posted strained first quarter results that were impacted by aggressive pricing and marketing promotion from rivals. However, Verizon Wireless countered its rivals early in the second quarter with new promotions of its own that appear to have swayed consumers.
Verizon Wireless reported that it added 549,000 branded net customer additions during the first quarter, including 539,000 customers to its postpaid and 10,000 customers to its prepaid service. Those results were well below those posted by smaller rivals AT&T Mobility and T-Mobile US, both of which launched aggressive promotions during the first quarter.
Analysts noted that McAdam’s comments would seem to indicate that Verizon Wireless has managed to shore up marketing challenges that impacted first quarter results.
“The announcement of better-than-expected net adds likely highlights that attrition at the low end of the company’s postpaid subscriber base is abating, in our opinion,” said Canaccord Genuity in a report. “We note competitors – specifically [T-Mobile US] – continue to be aggressively targeting such customers, likely the main driver of lackluster [first quarter] net additions.”
McAdam also commented that second quarter results would show record postpaid tablet sales and positive handset sales. Verizon Wireless said it added a record 634,000 postpaid tablet sales during the first quarter of this year. Verizon is set to announce second-quarter results on July 22.
In connection with Verizon’s robust forecast, analysts have noted that they also expect strong growth from AT&T Mobility. The carrier reported in early June that it expects to report at least 800,000 postpaid net additions for the second quarter. T-Mobile US has yet to pre-announce any second quarter results, but the carrier has shown tremendous net subscriber growth over the past 12 months, and is expected to continue that trend.
This would all leave little room for Sprint to post a customer growth turnaround during the second quarter, having lost more than 900,000 customers from its network over the past two quarters. The carrier has struggled through network issues tied to the turn down of its iDEN network as well as network quality issues tied to its Network Vision program. The carrier had previously stated that it did not expect any sort of customer rebound until at least the second half of this year.
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