Wireless Carriers Fall After Verizon's Move To Unlimited Data Hint At Price War
Shares of major wireless carriers are lower after Verizon (VZ) announced an unlimited data plan over the weekend. On Sunday, Verizon said it was offering an introductory plan that gives subscribers unlimited data on smartphones and tablets.
"With Verizon Unlimited, you also get HD video streaming, Mobile Hotspot, calling and texting to Mexico and Canada and up to 500 MB/day of 4G LTE roaming in Mexico and Canada -- included," the company added. The company's new plan comes in two options: $80 for unlimited data, talk and text on smartphones with paper-free billing and AutoPay and $45 per line for four lines with unlimited data, talk and text on smartphones and tablets with paper-free billing and AutoPay. Verizon had last offered unlimited data options to subscribers in 2012 before changing to plans that utilized tiered data buckets.
COMPETITORS: Sprint (S) and T-Mobile (TMUS) gained wireless share from Verizon after announcing unlimited plans of their own. In 2016, Verizon added 2.28M subscribers to its retail postpaid monthly plans compared to 4.51M in 2015. The company guided to flat revenue growth for 2017. According to a USA Today article following Verizon's fourth quarter earnings report, Edward Jones analyst Dave Heger noted that competitors T-Mobile and Sprint, which offer unlimited data plans, continue to make wireless gains creating "a competitive challenge" for Verizon. According to the USA Today article, the analyst added: "There's no question T-Mobile is picking up market share" in the "tough competitive environment. You may even have Sprint regaining some share, too, as they become more aggressive. Verizon... tries to offset that by having the best network and hold onto customers by having the best service experience." According to a Reuters article, Verizon's decision may crimp industry margins, adding pressure to the major carriers to crimp costs.
PRICE ACTION: Shares of Verizon are down almost 1%, while AT&T (T) is lower by almost 2%. Smaller players Sprint and T-Mobile US are also lower in afternoon trading, down 1.3% and 2.66%, respectively.
Disclosure: None.