January 24, 2014
Following a 3 percent drop in market value, Verizon has hinted at plans to get competitive in pricing, which customers will likely appreciate, but investors might not. The telco lost about $4 billion of its value, and some say it’s directly related to the competition among telcos to be the most aggressively priced. T-Mobile has been most notably aggressive in its pricing strategies, attracting new customers and possibly forcing Verizon to lower its fees as well.
“‘The competitive environment has changed again here in the fourth quarter, and you can expect us to respond accordingly.’ Those fighting words from Verizon chief financial officer Fran Shammo on an earnings call this morning have spooked investors,” reports Quartz.
The article says that despite solid quarterly results, Verizon might be getting ready to fight back against T-Mobile’s recent moves — likely resulting in a price war that will benefit customers more than it will investors.
T-Mobile has been “winning customers at an unprecedented rate” recently. Quartz notes that the company introduced “simplified” plans that separate the cost of a device from the cost of its data plan and international roaming comes free. T-Mobile’s most aggressive change of all, however, is that it now offers to pay termination fees.
“Verizon’s whole strategy has been built on having the best network, and charging the most for it,” Quartz says. Shammo’s comments about the current competition among telcos “might signal a shift in [Verizon’s] strategy, which would alter the telecom landscape dramatically.”
And it has already affected AT&T’s strategy. The company is now offering T-Mobile customers $200 in credit if they switch to AT&T.