Companies everywhere have started to release their Q1 earnings and some of them are not what you may have expected. When it comes to wireless carriers in the US, T-Mobile has released numbers that show CEO John Legere has truly been shaking up the industry. While reports from companies who haven't taken Legere as a true threat, are showing that may have been a mistake. Verizon's Q1 earnings reports show (for the first time ever) that they have been losing customers.
T-Mobile has been focusing less on contracts and more on devices over the past year. This method has seemed to work out for them, since in Q1 2014 they have posted a gain of 1.8 million postpaid subscribers. Those subscribers come from somewhere, and some may have even made the switch from Verizon. Though the people who may be more concerned for Verizon – other than Verizon's executives – are the company's investors. New postpaid subscribers make up for a lot of the business and with a lack of growth the company could be thought to be in a stand still; at least from the investor's perspective. A stand still could cause investors to pull out and cause even more issues for Verizon. However, Verizon does have reason to stay calm-as they are still the number one provider in the US. Not to mention there are other ways to bring in revenue to keep investors happy.
Verizon may not have gained many postpaid subscribers this quarter, still the company has found profits elsewhere. The Edge program(device upgrade plan) plus tablets have been well received for Verizon customers. The company reports that they have seen a 15% growth in the Edge program, and are expecting to see that double in Q2. As for tablets, Verizon has sold a net total of 634,000 tablets in Q1. The tablet sales are the most promising since tablets are considered non-traditional equipment with cellular connections. That alone has brought Verizon to a 43% growth in machine to machine segments of the company(tablets). The growth in tablets has left Fran Shammo (Verizon CFO) saying, "We exited the quarter better than we entered the quarter," Shammo continued to say, "I feel much better about the second quarter." Shammo had much more to say about the direction of the wireless industry as well.
Earlier, we noted that T-Mobile has been switching from contracts to device installment plans. Shammo says this isn't much of a change in the industry as T-Mobile may lead one to believe. According to Shammo, this method has only switched the balance of where money is made. Offering cheaper wireless service, with full priced devices that you pay off over time. At the end of the day, money is still made in the same market, just under a different heading. Shammo said "The industry is very healthy, and has a lot of room for growth."
Verizon may not have seen the growth they wanted in postpaid customers, but they have seen new services and tablets grow. So while T-Mobile is shaking up the industry and trying to change the face of wireless services across the US, Verizon's face will stay the same. Unshaken, and unafraid of T-Mobile and their rapid growth.