Verizon’s decision to offer more data for a lower price on two promotional plans comes as part of the carrier’s effort to hang on to would-be switchers in its lower tiers, Wells Fargo Senior Analyst Jennifer Fritzsche said Tuesday.
A Verizon spokeswoman confirmed the carrier is currently offering two promotional plans for individual customers that come with 5 GB of data for $55 ($60 without autopay) and 7 GB of data for $70, respectively. The spokeswoman said the 7 GB plan has been on the table for some time now, but noted the 5 GB plan went live in store and over the phone Tuesday and will be available online starting on Jan. 24. The promo plans are being offered alongside the carrier’s Verizon Plan lineup offering 2 GB for $35, 4GB for $50, 8 GB for $70, 12 GB for $80, 16 GB for $90, and 24 GB for $110 (with the 8 GB plan and above offering 2 GB of bonus data per line), the spokeswoman indicated.
But since Verizon has made it clear in the past it has no intention of getting into a promotional war with rivals, the question naturally follows: what is compelling Verizon to do this?
Interestingly, the move follows another aggressive promotion from the carrier – a free iPhone 7 with eligible trade in – during the week before Christmas. Fritzsche speculated the new plans stem from the fact that Verizon “is seeing some migration from these lower end individual users to other competitors.”
“While we believe Sprint has received some of these users, we believe TMUS has likely had the most success in Q4’16,” Fritzsche reported in her Tuesday note. “The timing of these new value plans is especially interesting – given that TMUS tends to be more promotional than others in Q1.”
And the numbers T-Mobile’s recent fourth quarter preview certainly seem to lend support to Fritzsche’s theory.
The Un-carrier said it reeled in 2.1 million total net additions during the period, including 1.2 million postpaid net additions and 933,000 postpaid phone net additions. While T-Mobile didn’t disclose what proportion of those additions came from rivals in the latest quarter, back in September T-Mobile CEO John Legere noted 250,000 postpaid phone and prepaid net customers made the switch from Verizon in the third quarter.
Though she said Verizon’s promotional plans offer “more value for the low data user customer,” Fritzsche observed there is one small catch: upgrade fees. Earlier this month, Verizon ditched two-year contracts and bumped up its upgrade fee from $20 to $30 for customers who pay the full retail price for their device.