Verizon CFO Talks Highly of the iPhone
Verizon Communications Chief Financial Officer, Fran Shammo, recently said that Apple’s free-on-contract iPhone 4 produced “a lot” of volume for Verizon Wireless and despite its high subsidy costs; the telecom will not offer incentives for sales staff to push low-cost alternatives.
Shammo’s comments were made during the Deutsche Bank 2013 Media, Internet & Telecom Conference where he fielded a few questions pertaining to the performance of Apple’s iPhone on Verizon’s U.S. network. It was previously announced in January that Apple’s iPhone accounted for 6.2 million of the 9.8 million smartphones Verizon activated in the fourth quarter of 2012, which was thhe strongest period of sales since the carrier started selling the handset in 2011.
The upstick in iPhone customers according to Shammo, was mostly due to the iPhone 4 price drop, which allowed Verizon to offer a free-on-contract Apple smartphone for the first time. The sales of the handset in turn led to strong growth in 3G subscriber numbers an important point given that the company is no longer investing in building out that network. As of right now, Shammo said that all the capital allocated to Verizon’s 3G services are for maintenance only.
The CFO was also asked whether he would incentivize Verizon’s salesforce to sell low-subsidy units in an attempt to manage margins. Shammo was against certain practices saying it's important that customers leave a Verizon store with what they want instead. According to a transcript provided by Verizon, Shammo said:
"The worst thing that can happen for us is for me to incent [sic] a salesperson to get you into a phone that you walk out the door with thinking you are going to like and in three days you come back because you don't like it. Therefore, now I've just subsidized two smartphones because that phone you used I can't resell as a new phone."
What do you think of Verizon’s stance on the matter?