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Verizon Struggles With First Decline in Wireless Subscribers

By Motley Fool Staff - Apr 26, 2017 at 6:21AM

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Despite its dominant position in the industry, the company cannot remain complacent for long.

In this segment from Motley Fool Money, the team considers the state of the wireless business in the U.S.

No. 1 player Verizon (VZ -2.17%) saw its number of subscribers shrink last quarter, and based on numbers from the past several years, it appears consumers are happily switching to the more competitive services of T-Mobile (TMUS 0.84%), and to a lesser degree, Sprint

A full transcript follows the video.

This video was recorded on April 21, 2017.

Chris Hill: For the first time ever, Verizon reported a quarterly loss. David, I'm sure there are other things of note in their first quarter report but a loss?

David Kretzmann: Yeah. It was their first-ever quarterly decline of wireless subscribers. So, they're finally, I think, feeling some pressure from T-Mobile and Sprint. But I think T-Mobile deserves a lot of the credit here. T-Mobile has really been aggressively going after Verizon and AT&T. Since 2013, the number of wireless subscribers with T-Mobile has grown from 44 million to over 71 million today. Verizon has 145 million, so they're still in that lead position. But I think they might be getting a little bit complacent here, and I think there is room for T-Mobile to disrupt Verizon and continue to gain some share. There was a recent spectrum auction with the FCC, essentially, where companies like Verizon, AT&T, and T-Mobile can bid on that spectrum from the FCC to grow their networks and grow the amount of data they can process and the speeds and so forth. T-Mobile spent nearly $8 billion for 45% of the available spectrum in that auction. AT&T did $900 million. Verizon didn't bid anything, they didn't bid for any of the available spectrum. For me, that signifies it. Maybe Verizon is a little bit complacent here. That leaves a lot of room for T-Mobile to boost the speed and capacity of their network. I like the position that T-Mobile is in. Over the past year, T-Mobile shares are up 61%, Verizon down 4%.

Hill: Is there a CEO in the public market that's more entertaining on Twitter than T-Mobile CEO John Legere? The way he just aggressively trolls, in particular, Verizon?

Kretzmann: Somehow he worked #verHIGHzon into one of his tweets going after Verizon CFO, he said, "Stop gouging your customers and start doing more for them! Seriously, how #verHIGHzon are you?!?"

Jason Moser: He actually sent that out on 4/20, too, right? April 20th? There you go.

Kretzmann: The man's brilliance just compounds.

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Stocks Mentioned

Verizon Communications Inc. Stock Quote
Verizon Communications Inc.
VZ
$50.96 (-2.17%) $-1.13
T-Mobile US, Inc. Stock Quote
T-Mobile US, Inc.
TMUS
$137.08 (0.84%) $1.14

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