In a competitive wireless business market, the CEO of Verizon Communications Inc. says the company “won’t waste money” on promotions.
The company recently dropped its contracts for Apple Inc
the new iPhone 14 line, which offers existing customers up to $800 off a new phone, while competitors AT&T Inc.
and T-Mobile US Inc.
each offered up to $1,000 off one of the phones for new and existing subscribers. Verizon
has offered more lucrative deals of up to $1,000 off a new iPhone, plus a $200 gift card, to customers who switch to its network and sign up with certain unlimited plans.
The wireless offerings can be a bit complicated to digest, but some analysts see the company’s deals as less aggressive than those of its competitors, as well as less aggressive than the carrier’s offerings a year ago.
CEO Hans Vestberg asked the question at a Goldman Sachs conference on Wednesday. Goldman Sachs analyst Brett Feldman called Verizon’s more “balanced” offerings, as well as Verizon’s new offering that bundles Apple service subscriptions, and asked about Vestberg’s comfort with the promotional approach his company has taken.
“I think we’re constantly evaluating what the best balance is,” Vestberg replied.
Verizon, like all wireless companies, must weigh the prospect of more customers against the financial effects of big deals. Vestberg called it a “more competitive market this year,” a perhaps unsurprising trend, in his view, given the rush to cash in on 5G’s relatively early days and the opportunity to attract subscribers as they get their first 5G-enabled devices. .
“We think we’re competing very well in the consumer segment in a competitive market, but we’re not going to throw money away,” he said, according to a transcript provided by Sentieo. “We want to have high-quality clients who really think about our value and [see] to create value for our clients and for ourselves.”
Verizon has lagged behind its major wireless rivals this year, with its stock down 21% over 2022, compared to AT&T’s 10% decline and T-Mobile’s 22% rise over the same period.
Vestberg called for some other actions Verizon has taken in the current climate, including raising prices for some plans in May. It was a “financially sound and sound decision to continue growing our cash flow,” he said on Wednesday.
The price moves are expected to create a “bubble of outflows” in the third quarter, although Vestberg said at the Goldman conference that outflows will “return to business as usual” in the fourth quarter.
Feldman asked if Verizon would “really have an opportunity to return to growth” in the first quarter, and Vestberg said yes.
The company also introduced a Welcome Unlimited package meant to entice people to bring their older phones to Verizon. That’s one of the factors Vestberg sees as helping to increase traffic in stores, and he noted that when customers come in, salespeople can talk to them about various plans.