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Verizon warns for mobile margin pressure in Q4

Verizon warns for mobile margin pressure in Q4

Verizon warned for pressure on its margins in the fourth quarter due a high level of promotional activity and customer phone upgrades in the mobile market. The EBITDA margin at the mobile division and across the group will be affected in the fourth quarter, as will earnings per share. 

Verizon said it was seeing “very strong” customer demand for 4G smartphones and tablets on its More Everything shared data plans in the fourth quarter to date. Retail postpaid gross additions are higher both sequentially and year over year. As new device drive customer phone upgrades, the company expects as much as 9.5 percent of its postpaid base to change phone this quarter. 

Verizon said around three-quarters of four upgrades were strategic or high-quality – meaning they were from a basic phone or a 3G smartphone or a high-value customer. The percentage of customers choosing the Verizon Edge equipment-installment plan option so far in Q4 is tracking to 24 percent, or double the rate of Q3 2014. However, total retail postpaid disconnects are trending higher both sequentially and year over year in the highly competitive market. 

In wireline, FiOS continues to drive consumer-revenue growth, while global enterprise and wholesale growth remain under pressure. The company reiterated that it remains on track to achieve full-year expansion of the wireline segment EBITDA margin. The company also reiterated that capital spending for 2014 is estimated to be around USD 17 billion. Verizon will report Q4 results on 22 January.

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