Verizon Reports Growing Wireless Segment Revenues in 4Q14 (Part 10 of 18)
Verizon’s Edge plan
In the previous part of this series, we learned about Verizon’s (VZ) More Everything plan. Here, we’ll look at another important plan that the carrier offers to its customers. Verizon offers its Edge plan, which lets customers buy devices on monthly installments. The plan is similar to AT&T’s (T) Next and Sprint’s (S) Easy Pay plans.
Benefits of the Edge plan
The Edge plan gives customers the option to buy a device on monthly installments without upfront payments. However, this option is based on customers meeting credit requirements.
Although the installment plan lasts for two years, customers can upgrade their device even after 30 days on the plan. However, customers have to make three-quarters of their payments in order to exercise this option.
The Edge plan also benefits Verizon. The plan is more profitable to the wireless carrier than traditional subsidy plans, which carry high subsidy costs. Please read Why adoption of the Edge program is important for Verizon to learn more about this advantage.
Customers choosing Verizon’s Edge plan increased in 4Q14
In 4Q14, ~25% of Verizon customers’ phone activations were on the Edge plan. Also, the sequential rise in the Edge take rate, or the percentage of customers choosing the plan, was significant during the quarter. As you can see in the chart above, the 3Q14 rate was half of the 4Q14 figure. Verizon’s Edge take rate was ~12% in 3Q14.
If you want to take on diversified exposure to Verizon, you can invest in the Technology Select Sector SPDR Fund (XLK). The ETF held ~5% in the carrier on March 19, 2015.
You can also take on more diversified exposure to the telecommunication company by investing in the iShares Russell 1000 Growth ETF (IWF). This ETF held ~1.8% in the company on the same date.
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