While there are only three major wireless providers in the United States, competition can be fierce. Verizon (NYSE: VZ) scored a win in the fourth quarter of last year with significant consumer phone subscriber gains, breaking a streak of lackluster results. However, the company's performance in the first quarter of 2025 indicates that subscriber growth at the end of 2024 was an anomaly.
Shedding consumer subscribers
Verizon added 1.7 million consumer wireless retail postpaid phone subscribers in the first quarter on a gross basis, which doesn't account for churn. That's down 1% year over year. In terms of net adds, which does account for churn, that translates into a loss of 356,000 subscribers in the quarter.
In the first quarter of 2024, Verizon shed 194,000 net consumer retail postpaid phone subscribers. It gained 367,000 subscribers in the fourth quarter of 2024, but the first-quarter losses largely erased those gains. Verizon performed better in other areas. The company reported a small gain in business retail postpaid phone net adds, and it doubled its prepaid net adds from the fourth quarter. Ultimately, total wireless service revenue rose by 2.7% year over year.
While wireless service revenue is still growing, subscriber losses remain a problem. Verizon took action earlier this month, rolling out two new features meant to improve customer retention. First, Verizon began offering new and existing customers a three-year price lock on wireless plans. This could help keep subscribers from jumping ship, although the price lock notably excludes fees and perks associated with the company's wireless plans.
Second, Verizon now guarantees that existing customers have access to the same promotions on new phones with trade-ins that new customers enjoy. Wireless providers often provide the best deals to new subscribers to lure them in while excluding existing customers from those offers. This move will raise Verizon's costs, but it could help knock down churn and reverse its recent subscriber losses.
A tough environment may be ahead
Verizon is betting that its customer-friendly price lock and trade-in features will help turn subscriber trends around, but competitors are also rolling out features meant to keep their own churn rates in check. AT&T, for example, began offering customers bill credits for outages earlier this year, providing a credit equivalent to a day's worth of service for any wireless outage lasting at least 60 minutes. Customer-first policies appear to be a trend in the industry, so Verizon's moves may not have a huge impact on its subscriber growth figures.
The bigger problem may be the state of the economy and the erratic tariff policies of the Trump administration. Tariffs could eventually hit smartphones, making Verizon's free phone offers even more expensive to provide. And if tariffs lead to an economic slowdown, consumers could delay bill payments, downgrade plans, or seek cheaper alternatives. In a recession, Verizon's perk-heavy wireless plans may not play as well with consumers.
Verizon's first-quarter results were a mixed bag, with subscriber gains in some areas offset by a weak showing in its postpaid consumer phone business. Signs of progress reversing subscriber trends were few and far between in the first-quarter report, and while the company's price lock and trade-in offers look like good ideas, they may have a limited impact on churn. Verizon is going into a potential economic slowdown playing catch-up with its competitors, which is not a great position to be in.
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Timothy Green has positions in AT&T. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.
