Verizon Communications Inc (NYSE:VZ) could face tough times ahead if AT&T Inc (NYSE:T) continues to intensify its wireless promotional efforts. Analyst opines that Verizon risks ending up in a “lose-lose” situation.
It was in the previous year that AT&T started unveiling a series of promotional offers. The company had outlined in one of the interviews that it sought to retain a significant fraction of its existing subscribers through the move. A section of analysts seemed pessimistic about the company’s plan, outlining that there could be issues sustaining the moves for the long run.
AT&T witnesses impressive wireless results
AT&T seems to be doing quite well, considering its most recent business performance. The company discloses that it witnessed better wireless results than it had anticipated in its projections. This company’s subscriber growth moved up by a significant margin.
AT&T’s stellar performance comes out as rather intimidating for Verizon. AT&T could end up triggering other wireless carriers to make similar promotional moves. Matters haven’t lately been looking great for Verizon, which is quite evident considering the company’s undesirable subscriber trends. Verizon seems more insistent on adopting a “wait-it-out” strategy to the rival’s promotions, which could hurt it in the long run. A section of analysts has been quick to comment, outlining that Verizon is in a predicament already.
Verizon spoke out recently, outlining that the continuity of AT&T’s promotional stance could result in a lose-lose situation. Verizon admits that AT&T has the freedom to make many moves, but it should also recognize that it doesn’t enjoy the luxury of outstanding options.
Tough times ahead for Verizon
A section of analysts has downplayed AT&T’s approach, saying that it is fated to result in lower wireless rates in the various sections of the wider industry. The consequences of AT&T’s approach won’t spare Verizon and thus needs to work with speed in bracing for difficult times ahead.
Verizon has already spent a great chunk of its resources to establish its 5G network, a move that has caused some market observers to regard the company’s stock as a “cheap” one. AT&T remains lag Verizon in terms of expanding its network, and it becomes tricky for analysts to give stock projections over the next six months.