Matthew Niknam from Deutsche Bank Securities has predicted that Verizon may yet have a chance to grow its base of postpaid subscribers after suffering a significant drop in both revenue and subscriber numbers in the first quarter of this year. During the first three months of this year, Verizon said they had unfortunately seen a net loss of 289,000 postpaid phone customers. However, their fortunes seemed to turn around a little once more with the introduction of plans with unlimited data back in the middle of February. If this had not been introduced, the company’s CFO Matt Ellis said that they were on track to lose nearly an additional 400,000 customers in the first quarter. Verizon wasn’t the first company to introduce unlimited plans – T-Mobile and Sprint also had unlimited data plans in place when Verizon’s was first introduced.
When their plan was unveiled, Verizon’s executive vice president John Stratton said there was significant interest in it from subscribers and that migration was very substantial, meaning that the company had been successful in luring away customers from other networks such as Sprint and T-Mobile. This is a little surprising, seeing as Verizon’s unlimited data plan is by far the most expensive one out there. However, the company believes that the higher prices are justified and that their customers are more than happy to pay a premium price to use the network. This was backed up by analysts at Pacific Crest who confirmed that the number of Verizon subscribers dramatically increased after the unlimited plans were first introduced.
In a letter to Verizon’s investors, Niknam went on to say that he believed Verizon would see an influx of around 125,000 net postpaid subscribers during the second quarter of this year, which would certainly be a substantial amount but would only be a little more than half of the amount of subscribers that they have lost so far this quarter. Niknam also stated “We believe Verizon has made a more concerted effort to retain and grow share in this segment, with an increasing focus on unlimited,” noting that he doesn’t believe that the imposition of a 200GB cap on the unlimited data plan that Verizon put in place back in January would harm Verizon’s profits, and insisted it would not lead to a loss of revenue.
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