Verizon Gives Key Updates and Growth Metrics at Conference
Take rate of Verizon’s installment plans
In the earlier parts of this series, we looked at certain aspects of Verizon’s (VZ) wireline segment. Now let’s turn to the wireless segment, the biggest component of the telecom company’s operations. In the recent UBS Global Media and Communications Conference held on December 7, 2015, Verizon’s chief financial officer, Fran Shammo, talked about the company’s installment plans and its potential penetration in the customer base.
During the event, Shammo said, “Our take rate in the fourth quarter will be somewhere around 70% take rate on installment sale and we are looking at that increasing into 2016 as we go more to 100% installment sale. So that will just continue to grow up to that 75% point, which is where some of our competitors are.”
Low penetration of Verizon’s installment plans compared to peers
Sequentially, the take rate of Verizon’s installment plans has been increasing evenly. As we can see in the above chart, the phone activations on Verizon’s installment plans rose significantly YoY (year-over-year) to ~58% in 3Q15 from ~12% in 3Q14.
In the postpaid phone base of the company, the penetration of these plans was ~22% during the quarter. However, the penetration of these plans in Verizon’s postpaid base remained relatively low with respect to comparable plans of Sprint (S), T-Mobile (TMUS), and AT&T (T) at the end of 3Q15.
For diversified exposure to Verizon, you may consider investing in the iShares Core High Dividend ETF (HDV). The telecom company made up ~6.1% of the ETF at the end of November 2015.
You should note that the ETF held a total of ~14.2% in telecom players on the same date.
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