Verizon reports 'significant level of interest' in new unlimited plans

John Stratton, Verizon's executive vice president and president of operations

Verizon reported it has seen a “significant level of interest” in the unlimited-data plans it launched last month, according to a research note from Deutsche Bank.

John Stratton, Verizon’s executive vice president and president of operations, appeared at Deutsche Bank’s Media & Telecom conference yesterday, emphasizing once again that the carrier is confident its network can handle the increased traffic the unlimited plans are sure to induce. The plans, which Verizon introduced last month amid an escalating war over unlimited-data services among all major U.S. carriers, start at $80 a month for a single line and cost $180 a month for four lines.

“We believe Verizon views the introduction of unlimited as a means of retaining and defending its share (which was tougher to do without this offer in the marketplace,” Matthew Niknam of Deutsche Bank wrote. “Verizon noted it has seen some optimization (i.e.: single-line customers on higher data buckets moving to lower-priced unlimited), though it continues to view the plans as ARPU-neutral. The company reiterated expectations for service revenue growth in 2018, with incremental cost efficiencies stemming from continued network virtualization (one-third complete to date) and increased digitalization.”

The move to unlimited marked a significant reversal for Verizon, which had long decried the wisdom of unlimited plans even as its rivals embraced them. “You cannot make money in an unlimited video world,” then-CFO Fran Shammo said in September. “You just cannot do it, because you need the cash flow to keep up with your demand.”

Verizon is struggling to compete in a U.S. wireless market in which growth has slowed to a crawl, however. The operator reported 167,000 net phone additions in the fourth quarter, but it saw wireless service revenue shrink 4.9% year-over-year, and it has warned that figure won’t return to growth this year.