Verizon Communications cautioned that competitive off-season promotions are expected to result in subdued wireless subscriber growth during the first quarter, causing its shares to plummet over 7% and triggering a sell-off in the telecommunications sector on Tuesday.
Amidst rival promotions following a heavy push in the December quarter, Chief Revenue Officer Frank Boulben noted at Deutsche Bank's Media, Internet & Telecom Conference, "This first quarter is a bit unusual."
With telecom companies in the U.S. ramping up incentives to win over customers as market growth slows, subscriber additions have increased while concerns regarding profitability have arisen.
Verizon highlighted a slow start to phone upgrades in the first quarter, signaling customer hesitancy in making purchases due to economic uncertainties and lack of significant new device features.
Despite these challenges, the company remains optimistic about achieving single-digit growth in annual phone upgrades and aims to attract more paying wireless subscribers in 2025, building on the success of its customizable myPlan.
The telecom sector's strong fourth-quarter performance was driven by bundled 5G services with high-speed fiber data and streaming services offered by industry leaders like Verizon and AT&T.
Concerns about the impact of stricter U.S. immigration policies on telecom companies were downplayed by Verizon and AT&T, who anticipate minimal effects, particularly within the postpaid market.
Regarding competition from satellite internet providers such as SpaceX's Starlink, both AT&T and Verizon emphasized the reliability and cost-effectiveness of wireless services, downplaying the immediate significant business potential of direct satellite connectivity.
In a separate development, T-Mobile announced plans to launch its satellite-to-cell service, powered by SpaceX's Starlink, in July at a competitive price point of $15 per month.