Verizon, the nation’s largest wireless carrier, is not optimistic about its business prospects during the current first quarter of 2025. Blaming off-season promotions by rival wireless providers, Verizon sees “soft” wireless subscriber growth during the current quarter which concludes at the end of this month. Verizon‘s forecast gave investors a reason to sell the stock which declined 7% yesterday. It also led to a broad sell-off in the telecom sector.
After the December quarter, which saw Verizon run its seasonal holiday promotions, the carrier pulled back on offering incentive deals to customers. But according to the carrier’s Chief Revenue Officer Frank Boulben who was speaking at Deutsche Bank’s Media, Internet & Telecom Conference, this backfired as rivals decided to continue offering deals during the first quarter making Verizon less competitive. Commenting on the current quarter, Boulben called it “A bit unusual.”
The wireless providers have offered promotions as a way to attract new customers and these deals are also being counted on to get customers of other carriers to switch. For example, nearly a week ago T-Mobile hiked the amount that it will pay subscribers switching to T-Mobile by $150 per line to as much as $800 per line for up to four lines. It also hiked the amount of bill credits that can be used toward the purchase of a new phone via a trade-in to $1,000 from $830.
Besides the big selloff of Verizon‘s shares on Tuesday, T-Mobile’s shares declined 3.66% and AT&T‘s stock was down 2%. PP Foresight analyst Paolo Pescatore said that the opportunity that the wireless firms have to add new subscribers is shrinking. Pescatore added that major broadband firms like Comcast are also offering aggressive promotions with their bids to poach customers from the big three wireless firms.
Interestingly, Verizon and AT&T also said that their numbers won’t be impacted by President Donald Trump’s tougher immigration policies. Analysts are concerned that a lower number of immigrants allowed into the U.S. will lower the potential pool of new customers for the carriers.
“We expect very limited impact on postpaid where customers have got to provide some form of identification to get onto a contract. If there is any impact, we will see it towards the low end of the prepaid market.”-Frank Boulben, Chief Revenue Officer, Verizon
Both firms also downplayed any disruption from T-Mobile‘s Starlink satellite service which automatically turns to satellites to send and receive texts in areas where there are no cellular signals.
Verizon says that it will add more postpaid customers this year than the 900,000 it added in 2024 thanks to more customizable plan options. Postpaid customers, who pay at the end of each month, are more profitable than prepaid customers who pay for each month of service in advance. Prepaid customers are more likely to switch their wireless providers to seek the lowest prices.
