By Ryan Knutson and Ben Fox Rubin
Verizon Communications Inc. lost wireless customers for the
first time early this year, as its rivals launched a bitter fight
for new subscribers.
The country's largest wireless carrier said it lost roughly
138,000 net postpaid phone customers in the first quarter, a
setback for a company that has steadily added subscribers in recent
years.
Verizon made up for the loss in phone customers by adding
634,000 tablet users. But the resulting net addition of 539,000
postpaid customers was eclipsed by the 625,000 added by AT&T
Inc., the first time Verizon has added fewer customers than its
rival since 2010, when AT&T still had exclusive rights to the
iPhone.
"To see Verizon actually losing phone customers is a shocking
turnaround, " said Craig Moffett, an analyst at MoffettNathanson.
"Verizon has been the growth leader of the industry every quarter
since they got the iPhone."
Verizon began offering the iPhone in early 2011.
The loss of phone customers came as the company's first-quarter
profit more than doubled to $3.95 billion, as revenue rose 4.8% to
$30.8 billion. During the quarter, the company completed the $130
billion acquisition of the 45% of Verizon Wireless owned by
joint-venture partner Vodafone Group PLC of the U.K.
Fran Shammo, Verizon's chief financial officer, said the company
lost some smartphone users along with subscribers still carrying
basic phones. The losses came primarily in January and February,
and Verizon responded by cutting rates on some of its data plans by
as much as 12.5%. Subscriber growth turned positive in March, Mr.
Shammo said.
"It's really just a competitive marketplace," Mr. Shammo said.
"We watch everything and respond accordingly."
Verizon rivals T-Mobile US Inc., AT&T and Sprint have all
offered big payouts to customers who switch to their service from
other carriers. Verizon hasn't responded as aggressively.
"You don't want to sacrifice the entire company just to reduce
price," Mr. Shammo said, adding that Verizon doesn't plan further
price adjustments.
At the end of the quarter, Verizon had 103.3 million retail
wireless customers, up 4.4% from a year ago. Total postpaid churn,
or the percentage of customers who left Verizon, was 1.07%,
compared with 1.01% a year earlier.
In its FiOS business, which provides Internet and video services
for residential and business customers, the company added 98,000
Internet and 57,000 video subscribers during the quarter. While
AT&T and Google are building out their fiber services to new
cities this year, Mr. Shammo said Verizon remains focused on
increasing its market share in areas where it already has FiOS,
rather than expanding into new areas.
FiOS additions dropped from a year ago owing to a price
increase, greater competition from cable and bad weather, the CFO
said.
Mr. Shammo said Verizon continues to migrate customers off
copper connections and onto fiber, converting about 78,000
customers in the first quarter.
Write to Ryan Knutson at ryan.knutson@wsj.com and Ben Fox Rubin
at ben.rubin@wsj.com
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