In a competitive market for wireless deals, Verizon Communications Inc.’s chief executive says the company is “not going to throw away money” on promotions.
The company recently rolled out its deals for Apple Inc.’s
new iPhone 14 line, offering existing customers up to $800 off a new phone, whereas rivals AT&T Inc.
and T-Mobile US Inc.
each offered up to $1,000 off one of the phones for both new and existing subscribers. Verizon
offered more lucrative deals of up to $1,000 off a new iPhone, plus a $200 gift card, to users switching over to its network and signing on with certain unlimited plans.
Wireless offers can be a bit complicated to digest, but some analysts saw the company’s deals as less aggressive than those from its rivals, as well as less aggressive than those the carrier offered the year before.
Chief Executive Hans Vestberg fielded a question on the matter Wednesday at a Goldman Sachs conference. Goldman Sachs analyst Brett Feldman called out Verizon’s “more balanced” deals, as well as a new Verizon offer that bundles subscriptions to Apple services, and asked about Vestberg’s comfort with the promotional approach his company has taken.
“I think that we constantly evaluate what is the best balance of it,” Vestberg replied.
Verizon, like all wireless companies, must weigh the prospect of greater customer numbers against the financial impacts of hefty deals. Vestberg called out a “more competitive market this year,” perhaps an unsurprising trend, in his view, given a rush to cash in on the relatively early days of 5G and opportunities to capture subscribers as they’re getting their first 5G-enabled devices.
“We think we compete really good in the consumer segment in a competitive market, but we’re not going to throw away money,” he said, according to a transcript provided by Sentieo. “We want to have high-quality customers that really think about our value and [see] that we are creating value for our customers and for ourselves.”
Verizon has lagged behind its major wireless peers this year, with its shares off 21% over the course of 2022, compared with a 10% decline for AT&T’s stock and a 22% rise in T-Mobile’s stock over the same span.
Vestberg called out some other actions that Verizon has taken in the current climate, including raising prices on some plans in May. That was “a financially right and sound decision in order to continue to grow our cash flow,” he said Wednesday.
The pricing moves are expected to create a “churn bubble” in the third quarter, though Vestberg said at the Goldman conference that churn “will come back to business as usual” in the fourth quarter.
Feldman asked if the first quarter was when Verizon would “really have the opportunity to get back to growth,” and Vestberg replied in the affirmative.
The company also rolled out a Welcome Unlimited plan meant to get people to bring their older phones over to Verizon. That’s among the factors Vestberg sees as helping to drive improved store traffic, and he noted that once customers come by, salespeople can have discussions with them about the various plans.