Investing.com -- Verizon (NYSE:VZ) shares dropped 3.7% in premarket trading as the company’s Chief Revenue Officer, Frank Boulben, gave a presentation at a Deutsche Bank (ETR:DBKGn) conference, signaling a challenging first quarter due to heightened competitive intensity in the telecommunications sector.
Boulben’s remarks highlighted a "tough" year-on-year comparison for the first quarter, with expectations for "soft" growth in new subscriber adds. He noted that Verizon has been adjusting its promotional activity in response to fluctuating demand, pulling back when demand wanes and reintroducing promotions when it picks up, as seen in March. This strategic flexibility, however, has not shielded the company from the competitive headwinds that have led to increased customer churn early in the year.
Additionally, Boulben discussed a shift in consumer behavior regarding device financing. With Verizon’s move to 36-month financing plans, customers are now keeping their devices for an average of over 41 months, compared to the higher upgrade rates observed when financing terms were set at 24 months. This change has implications for the company’s device upgrade cycle, with Verizon still expecting a middle single-digit growth rate year-on-year, but with a slow start in the first quarter and anticipation of a progressive ramp-up throughout the remainder of the year.
The industry as a whole is also experiencing a deceleration in growth from a net addition standpoint, particularly in the cable sector, according to Boulben.
The context provided indicates that Verizon is navigating a period of intensified competition and changing consumer behaviors, which are impacting its performance metrics. The company’s strategic response to these challenges will be closely watched by investors as Verizon aims to regain momentum in the subsequent quarters.
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