Competition is heating up in the [mobile] telecom industry as companies are slashing prices left and right just to retain the customers they already have. There was once a time when price cuts and discounts were reserved solely for attracting new customers, but it looks like this is a consumer-friendly industry, today.
Take Verizon Communications, for example. During the first three months of this year, the company posted its first-ever quarterly net loss of wireless subscribers. Furthermore, the company notes that these customers fled Verizon and probably went on to open accounts with rivals T-Mobile US Inc and Sprint Corp.
Verizon, of course, is the largest mobile carrier in the country (based on subscriber numbers) so it makes sense that the smaller companies would find ways to attract new customers. But nobody could have really anticipated anything like this, and to this extent, between the competitors.
Indeed, analyst Craig Moffettt attests, “The telecom industry is growth challenged,” in a research note to clients, adding that upcoming results from competing carriers could be just as bad.
Again, this could be a massive plus for consumers. Verizon posted a 5.1 percent decline in wireless revenue, falling to $20.9 billion. This contributes to what is now the fourth consecutive quarter of revenue decline for the nation’s largest carrier.
Obviously, wireless bills are a major expense for many households in the United States, so anything that helps alleviate some of this would be a boon for consumers. And it seems the trend will continue. March showed a 0.3 percent drop in the consumer price index with wireless services falling more than 11 percent year over year and a 7 percent drop between February and March.
As such, Verizon is trying to stem the bleeding, so to speak. Verizon Chief Financial Officer Matt Ellis, on a Thursday call with analysts, commented, “We’re confident in executing our strategy organically, but if there’s the right opportunity out there to accelerate the strategy inorganically in a way that adds holder value, we’re always looking at those opportunities.”
The company is also looking into exploring bigger transactions. For example, they may be partnering or absorbing Charter Communications, Inc, to help move a vast majority of Verizon’s unlimited data plan customers to more affordable plans (in order to entice them to stay and not depart for a cheaper bill with another company).