Verizon confirms bad news to its customers and T-Mobile rubs its hands

Verizon has faced a more challenging quarter than expected, with a significant drop in its mobile phone subscribers. The company reported a loss of 289,000 customers in its retail postpaid segment, much worse than anticipated, which led to a decline in its shares in the United States. This decrease is largely attributed to a reduction in promotions to attract new customers, a strategy Verizon adopted to protect its profit margins.

A challenging quarter for Verizon

The first quarter of 2025 did not meet analysts' expectations, who projected a much smaller loss compared to the 289,000 subscribers lost. Last year, Verizon had already experienced a drop of 114,000 subscribers, so this result is a bigger blow. Bloomberg's consensus projections were for 185,471 fewer subscribers, so the difference has negatively affected the company's performance.

The reason behind this decrease in customers is related to Verizon's decision to reduce promotions to attract new users. Meanwhile, the competition continues to drive their incentive campaigns, Verizon has chosen to move away from this aggressive strategy. According to Frank Boulben, Verizon's Chief Revenue Officer, competitors have continued with their off-season promotions, which has increased competition.

Growth strategy and economic challenges

Despite the decrease in subscribers, Verizon has had a stronger financial performance in other aspects. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increased by 4.1% year-over-year, reaching $12.6 billion, surpassing the estimates of $12.35 billion. Additionally, operating revenues were $33.5 billion, also above projections.

However, the company continues to face challenges in a saturated telecommunications market. Concerns about the U.S. economy have caused some customers to hold back on their purchases. This has affected the growth of the user base, which remains a challenge for Verizon, especially when its competitors are betting on aggressive incentives and promotions.

Outlook for the future

Despite the drop in subscribers, Verizon keeps its expectations for the rest of the year. The company reaffirmed its forecast of wireless service revenue growth between 2.0% and 2.8% for 2025. It also expects an increase of between 2.0% and 3.5% in adjusted revenues.

However, Verizon warned that these projections do not take into account possible impacts from Donald Trump's tariff policies, which could affect the telecommunications market in the future. Verizon's future will depend on its ability to adapt to an increasingly competitive market and to find ways to attract new customers. Doing so without relying heavily on promotions could pose a greater challenge if the competition continues to use aggressive strategies.