Verizon now has 1/3 of postpaid subs on Share Everything plans
Verizon Wireless (NYSE:VZ) has fully one-third of its postpaid subscriber base on its Share Everything plans less than a year after launching the plans, according to Verizon Communications CFO Fran Shammo.
Shammo, speaking Tuesday at the J.P. Morgan Global Technology, Media and Telecom Conference, said that adoption of the plans is better than expected and will contribute to continued growth for the carrier. Verizon said in mid-April that 30 percent of its retail postpaid customers were on its shared data plans as of the end for the first quarter. The company had 93.2 million retail postpaid connections as of the end of the first quarter.
Reiterating what he has said at previous investor conferences, Shammo noted that as more people adopt shared data plans, in general they add more devices, such as mobile hotspots and tablets. Then, he said, more consumers will use more data, which will generate more revenue for Verizon Wirelesses, since Share Everything plans are built around usage-based pricing for LTE data.
CTIA recently said wireless network data traffic in the United States rose 69.3 percent in 2012 from 2011. The trade group said the total amount of megabytes traveling over U.S. wireless networks in 2012 reached 1.468 trillion, up from 866.8 billion in 2011. However, that is a sharp drop from the 123 percent increase CTIA recorded from 2010 to 2011, suggesting that the rate of data traffic growth is slowing. However, Shammo said he was not seeing LTE data usage slowing among Verizon customers.
The Verizon finance chief also touched on Verizon Wireless' recent announcement that it will pay a $7 billion dividend to parent companies Verizon Communications and Vodafone by the end of June. The dividend payment came as something of a surprise given recent comments that Verizon Communications CEO Lowell McAdam made to analysts at J.P. Morgan, according to a report from the investment bank. McAdam said the parent companies could face a "lean" year in terms of receiving a dividend payment, and Verizon Wireless' focus would be on paying down the $5 billion in debt it has coming due between now and the middle of 2014 before making another dividend payment.
However, Shammo said that McAdam's comments had been misinterpreted, and that that the "lean" year referred to 2014 and that going forward Verizon would focus on paying down Verizon Wireless debt. "What Lowell said was the dividend going forward would be more lean than in the past," Shammo said. He said Verizon will continue to be a "good steward of cash at Verizon Wireless," and that if there is not a good use of cash, Verizon Wireless will pay a dividend. Shammo declined to comment on Verizon's relationship with Vodafone and reports that Verizon is looking to buy Vodafone's 45 percent stake in Verizon Wireless for $100 billion or more, though he has said Verizon would like to acquire the stake.
Shammo also touched on T-Mobile US' (NYSE:TMUS) new no-contract "Simple Choice" plans, in which customers can either pay for the full cost of devices up front or make a down payment and then pay off the cost of the device in monthly installments (customers can also bring unlocked devices to T-Mobile). Shammo said Verizon has looked at such a plan and launched an installment plan for tablets in the fourth quarter of 2012. However, he said the carrier's Share Everything pricing would not change regardless of whether Verizon launched a program to change how customers paid for devices. "We may give consumers more options to buy a phone but we will not change our service pricing," he said.
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