Verizon's stock falls as competition for customers heats up

Industries Associated Press

Verizon was among the biggest decliners in trading Tuesday after the company said that it's losing customers due to tough competition and that it will get more aggressive to counter promotions from rivals.

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The carrier said late Monday that it anticipates fourth-quarter promotional efforts and strong customer volumes will pressure earnings in the short term. Customers are departing at a higher rate in the current quarter than they did in the prior three-month period or in the same quarter a year ago, due to offers from other companies. That churn is occurring even as it upgrades customers to 4G from a basic phone or 3G smartphones.

Baird's William Power cut Verizon's rating to "Neutral" from "Outperform," fearing that it may be feeling more of a squeeze from competitors than in the past.

Cowen and Co.'s Colby Synesael expects the "competitive environment to worsen before improving."

Synesael said that value-oriented customers appear to be shifting to T-Mobile and Sprint, while AT&T and Verizon fight for the customers that they hope to upsell future products to next year.

Last week Sprint told customers of AT&T and Verizon that they would be willing to cut their bills in half if they switched over. Sprint is the No. 3 U.S. cellphone carrier behind Verizon and AT&T.

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Verizon reports fourth-quarter financial results on Jan. 22.

Shares of Verizon Communications Inc. declined $2.15, or 4.4 percent, to $46.75 in afternoon trading.