Talking about the third quarter of 2014, CEO Lowell McAdam, spoke on many topics concerning Verizon's increased postpaid subscriber base, the slow adoption of their Edge program, that they are open to the possibility of selling off some cell towers for the right price, and their interest in mobile video plans. When an earnings call is coming up, CEO's tend to be a little chatty and like to cover all of their bases, just in case an investor is listening.
Spoken like a true CEO, McAdam said that their third quarter postpaid retail net addition of customers increased 40-percent over last year's third quarter, which came in at 927,000 additions…not a bad increase considering all the noise from T-Mobile. However, in the same breath, he said Verizon's margins would be 'pressured' during the third quarter because of 'sluggish' adoption of their Edge service. Edge sales have only accounted for 12-percent of Verizon's total phone activations, with more customers still making use of the original two-year contract. The two-year contract costs Verizon more up front money because they have to foot the bill for subsidizing the device. Verizon said in a press release after McAdam spoke and said:
"Verizon expects strong customer growth and low Edge adoption rate this quarter to date to put some pressure on the wireless segment EBITDA service margin (non-GAAP) on a sequential basis. In second-quarter 2014, Verizon reported a wireless segment EBITDA service margin of 50.3 percent."
I am not exactly sure why Verizon would think that people would want to run out and spend full-price on a device and spread that price over 24 equal payments – our monthly plan payments are enough as they are. You still have to pay off the device before you can leave Verizon, so you are still tied in to a two-year 'un-contract.' There are some techies that need a new phone every few months, but getting an $800 phone for $200 is worth it for me to sign on the dotted line.
However, their Edge program still grew 13-percent in Q1 2014, another 18-percent in Q2 2014, but it seems to be slowing down. In contrast, AT&T has a full 50-percent of their subscribers using their Next plan – AT&T's equivalent to Verizon's Edge.
McAdam also said that they would entertain talks of selling off some of its towers. Apparently, Verizon received interest in their towers a couple of years ago, however, the bids were not high enough – so if the price is right, they could be yours. In 2013, AT&T sold and leased 9,700 of their towers, so it is not an uncommon occurrence…maybe that is why AT&T has so those annoying 'dropped calls.'
One of the last things McAdam spoke about was their interest in launching a mobile video service by the middle of 2015. He said the days of bundled TV packages with 300 channels are numbered. People have been asking for an a la carte form of TV packages and Verizon aims to please with Internet TV.
Please hit us up on our Google+ Page and let us know what you think of McAdam's take on Verizon…as always, we would love to hear from you.