Verizon Communications reported a larger-than-expected drop in wireless subscribers for the first quarter, as recent price increases and aggressive promotions from competitors weighed on customer retention.
The telecom giant lost 289,000 monthly bill-paying wireless subscribers between January and March, a sharp reversal from the 568,000 it added in the previous quarter. Analysts had projected a loss of around 166,400 subscribers, according to FactSet data.
Verizon had warned in March that unseasonal promotions from AT&T and T-Mobile would likely dampen its subscriber growth. The company also raised prices on several of its plans, including a $3 per line increase for customizable myPlan accounts with five or more lines, and a $4 increase for single lines under the New Verizon Plan.
“We had a pretty big price up in January, and the elasticity on that price up was higher than what we had anticipated,” said Sowmyanarayan Sampath, CEO of Verizon Consumer, in an interview with Reuters.
The increased churn led to subscriber losses, but Verizon saw a rebound in March, particularly in the last two weeks, and noted that April began with almost double-digit growth in subscriber additions.
To curb further customer exits, the company rolled out a three-year price guarantee in early April for its myPlan and myHome packages.
Despite subscriber losses, Verizon’s total revenue grew 1.5% year-over-year to $33.5 billion in Q1, slightly surpassing LSEG analyst estimates of $33.24 billion. Wireless service revenue rose 2.7% to $20.8 billion, supported by the implemented price hikes.
Verizon reaffirmed its full-year guidance for adjusted earnings and free cash flow, indicating confidence in its long-term strategy despite short-term headwinds.
