Verizon is seeing an industry-wide shift from prepaid to postpaid plans, according to Chief Financial Officer, Fran Shammo.
During a third quarter earnings call Tuesday morning, Shammo said that recent competitive pressure on pricing would drive customers to postpaid plans.
“We’re just looking at the overall industry, and the assumption is that we do see the prepaid customer moving,” Shammo said. “If you look at single-line pricing, those price points are pretty close to what you’d pay on postpaid.”
Shammo made the comments during an earnings call that saw Verizon Wireless post a whopping 1.5 million postpaid net adds in the third quarter, up 63.5 percent from the same quarter last year.
Tablet continued to be a big driver of usage. Broken out Verizon’s total postpaid additions included 457,000 postpaid phones and 1.1 million postpaid tablets. Shammo noted that tablet customers are currently using more data than a 3G smartphone customers.
While margins slipped slightly year over year to 48.5 percent on $12.6 billion in capital expenditures (CapEx), revenue for the company’s wireless segment was up 7 percent to $21.8 billion. Consolidated earnings per share came in at 89 cents per share, up from 78 cents per share in the same quarter last year.
Shammo said that he still expects CapEx to hi $17 billion by the end of the year, but he believes the company can improve on margins going forward.
When asked whether increased upgrades in the fourth quarter would improve margins, Shammo said that service revenue margins will continue to be affected by Verizon’s response to competition.
“There is some deceleration here, as we increase the bundles, it’s going to take some time before people have to take the next step up,” Shammo said.
In all, Verizon activated 8.9 million smartphones during the quarter. The carrier noted that 77 percent of all phones on Verizon’s network are now smartphones, up 67 percent from the same quarter last year. Retail postpaid average revenue per account (ARPA) increased 3.5 percent annually to $161.24 per month.
While Verizon has expanded its XLTE offering to 400 markets on its AWS holdings, Shammo said he was unable to comment on the upcoming AWS auction due to the FCC rules.
Shares of Verizon were down 1 percent to $48 in early trading Tuesday.