Verizon says it’s “very hard to be the top brand,” but that the new efforts will pay off

The iPhone 14 comes in a difficult climate for the US wireless market, but Verizon Communications Inc.
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The executive is upbeat about the efforts her company has made both in the past and in response to Apple Inc.’s AAPL.
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big launch.

While Manon Brouillette, head of Verizon’s consumer group, acknowledged at a Bank of America conference Thursday that “the consumer climate is deteriorating,” she also said the company has been able to adapt to the current environment in a way that it’s “very pleased. with.”

Inflation and other consumer financial pressures are a challenge for Verizon and its rivals, but in general, carriers are facing lower “switching” levels than they once saw. Wireless companies have all sought to retain more of their existing subscribers, and that means a smaller pool of switchers for competitors to go after.

See also: Verizon stock downgraded as Bank of America expects ‘5G to be a thing’

Brouillette said she told her team that “we can no longer rely on the switcher pool to win and there are other ways,” according to a transcript of the event provided by Sentieo. But he also highlighted aspects of Verizon’s offerings that he believes will attract newcomers.

The company has a relatively new Welcome Unlimited plan meant to attract more budget-minded consumers without relying on device subsidies. In addition, the company offers packages with fixed wireless home Internet access, which Brouillette believes appeals to value-conscious users.

The launch of each new iPhone presents dilemmas for wireless carriers, which want to make sure they get a piece of the frenzy surrounding explosive new devices, but not in a way that’s too detrimental to profits. Discounts can help consumers choose between different wireless carriers, but if carriers are too aggressive with their offers, they can end up at each other to the point that all parties ultimately lose.

Verizon has been seen as a relatively more rational player in the promotional environment, with one analyst calling the company the industry’s “elder politician.”

Brouillette appeared to hint at that dynamic at Thursday’s event, saying “it’s very difficult to be the premium brand” in an inflationary environment.

With the debut of the iPhone 14 this year, Verizon introduced a plan that includes the Apple One bundle with music, gaming, streaming TV and iCloud storage services. This kind of wireless service bundle is exclusive to Verizon and was “the biggest surprise,” according to Brouillette.

On the subject of handset subsidies, he acknowledged the balance Verizon faces. The company wants to be “competitive on the acquisition front,” but also keep its long-term financials in mind.

“We have the best Ebitda margin in the market and I want to stay there,” she said, referring to earnings before interest, taxes, depreciation and amortization.

Verizon shares have been down this year, down 20% through 2022, as the S&P 500 SPX,
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has lost 16%. Brouillette seemed to acknowledge the recent challenges, but hinted that better times could be ahead.

“I think, of course, as investors, you look at the business and say, ‘Oh my God, things aren’t going our way,'” he said. “First of all, things don’t go our way either. That’s the important thing here, but the point is that we act on it and that trend is changing.”

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