Due to sluggish phone upgrades in the US, Verizon Communications (VZ.N), which opened a new tab on Monday, missed quarterly revenue projections. This took the shine off the company’s impressive rise in cellular customers and caused shares of the telecom company to drop 3.4% before the bell.
Customers who are cost-conscious are keeping their outdated phones longer than they used to, which has a negative impact on telecom firms’ upgrade rates for promotional programs that include new mobile phone lines.
Based on LSEG statistics, Verizon reported revenue of $32.8 billion for the second quarter, which was lower than the average projection of $33.06 billion made by analysts.
According to analysts, Verizon is suffering from a historically low rate of phone upgrades. However, this might change later this year when Apple (AAPL.O) introduces its newest iPhones with artificial intelligence (AI) features.
After 5G and foldables, generative AI smartphones will be the next big thing driving the smartphone market in the second half of the year, according to research firm IDC’s announcement last week.
Visible Alpha reports that Verizon reported adding 148,000 net monthly bill-paying wireless phone customers between April and June, surpassing the average projection of 127,870 additions made by experts. 68,000 customers had canceled in the previous quarter.
The company’s May 2018 debut of myPlan, which lets users pay for just what they need, has improved its ability to compete in the highly regulated U.S. cellular market against AT&T (T.N), opens new tab, and T-Mobile US (TMUS.O).
Additionally, Verizon collaborated with streaming providers to provide promotional packages from sites including Disney’s (DIS.N), Warner Bros. Discovery’s Max (WBD.O), Netflix (NFLX.O), and Warner Bros. Discovery’s Max (WBD.O).
In an effort to get consumers to convert to the new plans, it even increased the cost of certain existing plans in March. The company’s consumer segment recorded net losses of 8,000 wireless retail postpaid phone subscribers in the current quarter, compared with 136,000 losses a year earlier.
