Report: Verizon outpaces rivals in Q1 with phone activations

Verizon Wireless (NYSE: VZ) took the largest share of phone subscriber activations in the first quarter, according to a survey released by research firm Consumer Intelligence Research Partners.

According to the survey, Verizon nabbed 35 percent of all phone activations, followed by AT&T Mobility (NYSE: T) with 28 percent, T-Mobile US (NYSE:TMUS) with 15 percent, and Sprint (NYSE: S) with 9 percent. CIRP reported that all other regional and prepaid carriers made up the remaining 13 percent.

CIRP conducted its survey from April 1 through 6, and reached 500 people in the U.S. who bought a phone during the first quarter of 2014.

Neither Verizon nor AT&T saw real improvement in attracting phone activations in the quarter, CIRP found, with AT&T actually falling. However, T-Mobile improved its share from 13 percent at the start of the first quarter to 15 percent by the end, while Sprint edged up from 8 percent to 9 percent.

In terms of combating churn, Verizon, AT&T, and Sprint retained the most subscribers in the first quarter by holding onto 80 percent of eligible customers, CIRP said. T-Mobile kept only around 70 percent of its existing customers, but battled back by seeing a surge in switchers from other carriers.

"We measure retention relative to the customers that a carrier had a chance to keep or lose," CIRP partner and co-founder Josh Lowitz said in a statement. "We define these customers as those that activated a new or used phone in the quarter, so they had the choice to switch or stay with their existing carrier. T-Mobile made up for this lower retention by gaining many more customers from other carriers."

Since January T-Mobile has been offering customers up to $650 to pay off their Early Termination Fees if they switch to T-Mobile and trade in their phones. Sprint recently launched an identical offer that runs through May 8.

Verizon recently said customers who are on month-to-month contracts or who bring their own phones can now get discounts on their service pricing by moving to the carrier's "More Everything" shared data plans. The company also cut the price of its More Everything plans at 10 GB per month or more for customers on its Edge handset upgrade program. The carrier said that, for customers on its Edge program, it would cut $25 off the cost of a line of service to a smartphone if customers choose a data bucket of 10 GB or more. The result exactly matches the pricing AT&T launched in February--four smartphones sharing 10 GB of data for $160.

Jefferies analysts Mike McCormack, Scott Goldman and Tudor Mustata wrote in a research note that the market for equipment installment plans "is moving more rapidly than expected, and recent pricing and promotional activity at Verizon suggest a greater push than initially anticipated, though still materially slower than peers."

Under Verizon's Edge handset financing plan, customers need to pay off half the retail cost on the phone before they can upgrade. Additionally, Edge customers must use Verizon's shared data plans. However, they can now upgrade after 30 days; previously, they had to wait six months to upgrade.

The Jefferies analysts found that for every 5 percent of customers who use Edge, Verizon sees 0.4 percent improvement in is wireless margins. However, Verizon is still focused on margins and premium pricing, they wrote. "The pace of pricing changes has seemingly accelerated in the past quarter, contributing to largely negative investor sentiment in the space," they wrote. "However, we believe Verizon is more immune than peers as its competitive response has been more targeted at preserving high end share and stimulating usage/device penetration, rather than share shifts at the low end."

For more:
- see this CNET article

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