By Harshita Mary Varghese
(Reuters) -Verizon Communications lost more wireless subscribers in the first quarter than Wall Street expected, as the U.S. telecom giant grappled with the fallout of recent price hikes and aggressive promotions from rivals.
Shares of the company fell 3.4% in premarket trading.
The company warned in March that off-season promotions by AT&T and T-Mobile would result in “soft” subscriber growth, fueling fears about intensifying competition in an industry vying for a limited pool of new subscribers.
It also raised monthly prices for its customizable myPlan accounts with five lines or more by $3 per line, while customers on the New Verizon Plan faced a $4 per line increase for single mobile lines.
“We had a pretty big price up in January, and the elasticity on that price up was higher than what we had anticipated,” Sowmyanarayan Sampath, CEO of Verizon Consumer, told Reuters.
That led to a higher churn, percentage of customers exiting a service, with Verizon reporting a loss of 289,000 monthly bill-paying wireless subscribers in the first quarter, after it added a record 568,000 customers in the December quarter.
Analysts had expected the company to lose 166,400 subscribers, according to FactSet data.
“March was very strong, especially the last two weeks and in April, we were running almost double-digit growth,” Sampath said.
The company introduced a three-year price guarantee in early April to lock in customers for its myPlan and myHome offerings.
It also reaffirmed its annual adjusted profit and free cash flow outlook, a sign it was confident in its business plans amid economic uncertainty.
In the first quarter, total revenue grew 1.5% to $33.5 billion, edging past analysts’ estimates of $33.24 billion, according to data compiled by LSEG.
Wireless service revenue grew 2.7% to $20.8 billion, helped by the price hikes implemented by the company.
(Reporting by Harshita Mary Varghese in Bengaluru; Editing by Arun Koyyur)
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