(Corrects spelling of analyst's last name to Fritzsche in
paragraph 10. Corrects name of company to T-Mobile US Inc, not
T-Mobile USA in paragraph 3.)
By Anjali Athavaley
NEW YORK Feb 13 Verizon Communications Inc's
announcement that it will once again offer an unlimited
pricing plan marks a shift in its thinking as a price war among
the four biggest U.S wireless carriers accelerates.
The biggest wireless carrier in the U.S. said on Sunday that
it will offer an unlimited data plan, its first in more than
The plan, priced at $80 a month for unlimited data, talk and
text on a single line, is cheaper than AT&T's unlimited plan for
DirecTV now and U-Verse subscribers but costs more than plans
offered by smaller rivals T-Mobile US Inc and Sprint
Corp. On Monday, Verizon also said it was offering free
smartphones for customers who switched over.
T-Mobile shares fell 2.8 percent in early afternoon trading
on Nasdaq. AT&T, Sprint and Verizon shares were down roughly 1
percent on the New York Stock Exchange as investors worried
about how a price war would erode margins.
Verizon stopped offering unlimited plans in 2011 largely due
to concerns about network capacity and a desire to charge more
to customers who were heavier users of data, Dave Heger, senior
equity analyst at Edward Jones, said in an interview.
On an earnings conference call with investors in late
January, Chief Financial Officer Matt Ellis said the quality of
Verizon's network allowed the company to maintain a premium
price, adding that an unlimited plan was "not something we feel
the need to do."
"Verizon resisted going back to unlimited if they could,"
Heger said. "It became obvious that the market wasn't going to
necessarily allow that."
The move could hurt the industry's profit margins, putting
more pressure on major players to cut costs, analysts said.
"As the carrier was the last holdout, the announcement
solidifies the industry's move back to unlimited plans which
ultimately constricts growth and elevates the pressure to drive
down network costs," Amir Rozwadowski, an analyst at Barclays,
said in a note.
But Jennifer Fritzsche, an analyst at Wells Fargo, argued
that the move was a "fightback" moment for the company.
Verizon said in January that it added fewer subscribers than
anticipated in the fourth quarter. Defections among wireless
customers who pay bills on a monthly basis increased to 1.10
percent of total wireless subscribers, compared with the average
analyst estimate of 1.05 percent, according to FactSet.
(Reporting by Anjali Athavaley; Editing by Alan Crosby)