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Verizon expects no iPhone glitches; Intends to phase out unlimited data plan

Verizon Communications Inc. vowed Tuesday not to mess up its iPhone launch next month.

That could be a bold boast, considering how problematic the iPhone has been for AT&T Inc., its exclusive U.S. carrier so far. A server meltdown that accompanied the iPhone 3G launch in 2008 left people unable to use their phones for as long as a day. The phone later overloaded AT&T's network in many areas.

Verizon says it has learned from AT&T's mistakes since its first iPhone in 2007. Through last year, Verizon added capacity to its network with the iPhone in mind.

"We're not going to have any flaws on the execution of the iPhone launch," Fran Shammo, chief financial officer, told Wall Street analysts Tuesday.

Verizon announced two weeks ago that it would start selling Apple Inc.'s iPhone on Feb. 10. AT&T's exclusive hold on the phone has left Verizon behind in attracting smart-phone subscribers, but it now hopes to catch up.

The company, however, doesn't have a good idea of how many iPhones it might sell. Refusing to give a projection, Shammo would acknowledge only that the average analyst forecast calls for11 million units this year, roughly the same amount AT&T sold in the first nine months of last year. Analyst projections vary from 5 million to 13 million.

Lowell McAdam, Verizon's chief operating officer, confirmed on the sidelines of the meeting that the company's standard $30-per-month unlimited data plan will be available for the iPhone. AT&T abolished its unlimited data plan for new customers last summer, ahead of the launch of the iPhone 4 in June.

"That's a competitive advantage for us right now," McAdam said.

The offer, however, won't last: McAdam reiterated that the company soon will switch to plans with a monthly data allotment.

A $15-per-month limited data plan the company tried out over the holidays for other smart phones won't be available for the iPhone. That plan is being phased out at the end of the month, executives said.

Verizon also is tightening some of its policies ahead of the launch. It's abolishing its "New Every Two" program, which has given current customers additional discounts of up to $100 on new phones. Current customers will get the discount one last time. Verizon is also reducing its return period for phones to 14 from 30 days.

Analysts had been assuming that Verizon would take a hit to its earnings this year because it will subsidize each new iPhone by about $400 to bring the purchase price down to $200 to $300. Tuesday, the company indicated that the drag on earnings would be smaller than expected, if iPhone sales come in around 11 million. It projected earnings of $2.18 to $2.25 per share for this year, excluding unusual items. Analysts polled by FactSet on average expected earnings of $2.19.

Verizon shares rose 55 cents, or1.6 percent, to $35.79 Tuesday. The shares hit a multiple-year high of $37.70 in early January as investors grew excited about the prospect of a Verizon iPhone.

Verizon also reported fourth-quarter results Tuesday, revealing that its wireless arm did well even without help from the iPhone.

Verizon Wireless added 872,000 subscribers on contract-based plans, well above analyst expectations of about 650,000. Contract-based subscribers are the most lucrative, and Verizon said three-quarters of the new subscribers bought smart phones, which come with added data fees.

The New York-based telecommunications company reported net income of $2.64 billion, or 93 cents per share, for the last three months of last year, up from $617 million, or 22 cents per share, a year ago. The increase, however, mainly resulted from adjustments for the value of the company's retirement plans.

Excluding special items, earnings were 54 cents per share, a penny shy of analysts' estimates.

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