Verizon (VZ) , the top mobile provider in the U.S., recently faced an increase in profits as it welcomed 568,000 new consumer postpaid phone net additions during the last few months of 2024.
The company’s fourth-quarter earnings report for 2024 revealed that it earned $27.6 billion in total consumer revenue, a 2.2% increase compared to the same period in 2023.
Verizon’s wireless service revenue also rose by 3% year-over-year, which the company claimed was mainly due to recent “pricing actions.”
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Verizon raises alarm bells about consumer trend
Despite the recent profit increase, Verizon is sounding the alarm on a startling pattern in customer behavior.
While speaking at the Morgan Stanley Technology, Media & Telecom Conference on March 4, Verizon Chief Financial Officer Tony Skiadas said that the phone carrier is seeing year-over-year declines in phone upgrades.
“Customers continue by choice to hang on to their phones for longer periods of time,” said Skiadas. “The average upgrade cycle for us is up over 40 months. It’s like 42 months right now. So the phones are made better. And from our standpoint, we’ll continue to be disciplined in our approach to retention.”
Consumers across the nation have been tightening their spending amid inflation and higher costs of living, so it is no surprise that they are putting phone upgrades on pause.
A new iPhone, for example, can cost as much as $1,100. According to a recent survey from WalletHub, 63% of Americans said that they will not be buying a new phone due to inflation.
“When day-to-day living costs are already high, it’s hard for many people to justify an expensive phone upgrade,” said WalletHub Analyst Chip Lupo in the survey. “In fact, 9 in 10 Americans think iPhones are overpriced, so Apple and other phone companies may need to consider lowering prices or offering more substantial feature differences between models to entice customers.”
Verizon sends stern warning about its recent performance
In addition to fewer phone upgrades, Verizon also warned investors in a recent SEC filing that it expects postpaid phone gross additions in the first quarter of 2025 to either remain flat or slightly decrease, compared to the same time period last year.
While speaking at the Deutsche Bank conference on March 11, Verizon Chief Revenue Officer Frank Boulben said that the company is facing softer demand this quarter due to increased competition.
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“It’s been a challenging quarter from a competitive intensity standpoint,” said Boulben.
Shortly after the announcement, Verzion’s shares declined by about 6%.
The weakening in demand comes after Verizon hiked monthly prices in January for wireless customers with myPlan and New Verizon Plan accounts. Verizon said the price increases were due to “rising operational costs.”
Also, last month, a brochure added to Verizon’s website revealed that the monthly price of its Verizon Mobile Protect Multi-Device plan, specifically for customers with four to 20 lines, will increase from $60 to $68, which will go into effect on March 27.
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Verizon’s Mobile Secure Multi-Device plan, which provides customers with 24/7 tech support as well as performance, privacy and security features, etc., will also increase in price on March 27.
Customers with four to 20 lines on the plan will see their monthly price increase from $21.60 to $29.60.
During an earnings call on Jan. 24, Verizon Consumer Group CEO Sowmyanarayan Sampath said the company’s price hikes this year will bring more “value” for customers.
“We had four major price-ups in 2024, we’ve had two in 2025, because we are delivering more value to our customers, and they feel very comfortable with our price structure,” said Sampath.
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