Wednesday, October 17, 2012

Verizon Wireless Thoughts Ahead of the Earnings

Verizon Wireless is set to release its earnings and performance metrics tomorrow, October 18th at 8:30 AM. The wireless group has been a rock steady performer as evidenced by many quarters of impressive net additions and churn.    

What to hope for this year's Q3? 

Net Additions: Wholesale net additions have been helping out many carriers' numbers. This is a trend that should continue given emphasis on M2M.  The true test is how many new postpaid customers the carrier will bring on board. As Verizon Wireless is mainly a postpaid company and the postpaid market penetration increases, there are high expectations for the carrier to continue to crank out more customers.    

Verizon Wireless has never gone below 500,000 postpaid net adds since Q1 2010.  With Q2 2012 delivering 888,0000 postpaid, the expectations are high. Yet a shining light has emerged since Q2 2011 for the prepaid group, turning the ship from losing subs to greatly contribute to the overall numbers.

There are equally high expectations for Q3 from the prepaid side given the momentum over the previous quarters.

Churn: It's like a broken record. Verizon Wireless can do no wrong in terms of churn.  Their subscriber loyalty and network messaging has proven out quarter after quarter. Any spike would be alarming. Any drop only strengthens their operations.

ARPU (Rather - Postpaid ARPU):    Postpaid ARPU is likely to going up but the largest US carrier has a lot of catching up to AT&T and Sprint.


This could be the quarter that Average Revenue Per Account (ARPA) gets introduced.  Executives have been on the media and investor circuit arguing that ARPU would be dated and the true indicator should be by account, given its thrust into shared data plans.