Verizon Communications Inc. (NYSE:VZ) may have had a good year so far as far as profits are concerned but the company expects tough times ahead as competition increases.
The company has been facing increasing competition from rival wireless communication firms as each aims to gain the top spot. Carriers have been improving their services and this has given users an incentive for sticking with their providers rather than switching carriers. This is one of the reasons why it is increasingly hard for these companies to gain new customers. Analysts reported that the number of customers switching carriers is at a record low, a sign that most companies are actually doing the right thing.
The situation is expected to become tougher for Verizon because the market is already saturated and the competition keeps growing. Carriers including Verizon are now counting on deals from mobile manufacturers such as Apple Inc. (NASDAQ:AAPL) so that they can cash in on deals such as with the iPhone 7. Verizon CFO Fran Shammo stated that the company experienced a decline in upgrades and that was mostly because of the Samsung Galaxy Note 7’s recall. He also stated that the company has approached this year with an aim to protect its high-quality base since subscribers and earnings are expected to slow.
“It’s going to be slower growth for the entire industry as it gets more densified (sic),” stated Shammo.
The CFO also pointed out that the latest unlimited offerings provided by Verizon’s rivals had a negative impact on the company’s growth numbers at the time of their launch. Things seemed to be stabilizing according to him though, but then the Samsung recall happened. The Samsung recall also affected Verizon in a big way because the carrier was one of the top suppliers of high-end Samsung handsets. The company recently released its Q3 earnings, revealing a 4% drop in revenue from its wireless unit.
“We will continue to be very rational in our competitive response,” noted Shammo.
Verizon stock closed the latest trading session at $49.14.