No, Verizon Doesn't Want to Ditch Contracts

By Evan Niu, CFA – Apr 7, 2013 at 5:00PM

NYSE: VZ

Verizon Communications

Market Cap

$167B

Today's Change

(0.03%) $0.01

Current Price

$39.78

Price as of April 17, 2024, 4:00 p.m. ET

Verizon's CEO made recent comments that suggested he'd be open to ditching contracts, but ultimately that's the last thing Big Red wants to do.

There were recent reports that Verizon (VZ 0.03%) CEO Lowell McAdam would be interested in ditching service contracts. However, this isn't likely to be the case, since the major carriers -- Verizon, AT&T (T 0.19%), and Sprint Nextel (S) -- have spent years building fortresses around subsidies and contracts to reduce the risk of becoming commoditized service providers. Big Red is certainly watching how T-Mobile's big move away from contracts works out, and could adapt if need be.

In the following video, Fool contributor Evan Niu, CFA, explains why Verizon definitely doesn't want to get rid of contracts.

Fool contributor Evan Niu, CFA, owns shares of Verizon Communications. The Motley Fool has no position in any of the stocks mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.