Verizon continues to feel pressure from wireless rivals

The largest US carrier remained vulnerable to competitors' pitches in the first quarter of 2015, but it did manage to slow the number of customers jumping ship.

Marguerite Reardon Former senior reporter
Marguerite Reardon started as a CNET News reporter in 2004, covering cellphone services, broadband, citywide Wi-Fi, the Net neutrality debate and the consolidation of the phone companies.
Marguerite Reardon
2 min read

Verizon may not have added as many new wireless customers as some analysts predicted, but the company slowed the number of customers leaving its service in the first quarter of 2015.

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Last quarter Verizon began showing vulnerability to the aggressive pricing and marketing tactics of its competitors. But for the first quarter of 2015, the nation's No. 1 carrier in terms of subscribers is getting its groove back. The company added a total of 565,000 new postpaid subscribers during the first quarter, it reported Tuesday. This figure fell short of expectations of 620,000 new postpaid subscribers.

But in spite of intense marketing pressure from AT&T, Sprint and T-Mobile, Verizon reduced the rate at which customers left its network in the first quarter. Verizon reported that its so-called churn rate, or the rate at which customers leave a service, was 1.03 percent in first-quarter 2015. This was down from a churn rate of 1.14 percent in the fourth quarter of last year.

Fran Shammo, Verizon's chief financial officer, said the company expects to add fewer customers in the early part of the year. And he expects to pick up new customers as the year goes on.

"The second quarter is always a stronger quarter for us," Shammo said in an interview. "And we expect things to accelerate later in the year."

Verizon ended the quarter with 108.6 million total retail connections, of which 102.6 million were the more valuable postpaid customers.

"We are maintaining a disciplined approach with a focus on retaining high-value customers," Shammo said during a call with investors and press. "We are seeing good results with our postpaid smartphone churn, less than 0.9 percent as compared to our basic phone churn at more than 1.2 percent in the quarter."

Shammo added that the company is also seeing more usage from its smartphone customers. The average data usage was up 54 percent year over year.

"This is beneficial to us because increasing consumption of content will ultimately drive higher revenue with a lower cost to serve due to the efficiency of our LTE network," he said.

Verizon also managed to beat analyst expectations for its earnings. In the first quarter, the company reported earnings per share of $1.02. This was higher than the 95 cents per share analysts had expected. But Verizon didn't deliver on revenue, missing analysts' target for sales. In the first quarter, the company reported revenue of $31.98 billion, which is about $290 million less than what analysts had expected.

Shares of Verizon were up 0.5 percent, to $49.38, in early trading.

Update, 8:45 am PT: Adds comments from the investor conference call.