Fran Shammo, CFO of Verizon, got candid during a question answer session on Monday, March 4th when he took the stage at the Duetsche Bank Annual Media, Internet & Telecom conference. During the period Shammo answered some questions related to Apple’s iPhone after Verizon stated in its last quarter earnings that 9.8 million smartphones were activated through its network, of which 6.2 million were iPhone. Of these 6.2 million iPhones, 3.1 million were iPhone 5, which means that Apple’s latest smartphone was the one that had enabled Verizon to put up such remarkable numbers. However, Shammo revealed that is was the free iPhone 4 deal that really showed good numbers during the last quarter, as he said:
“But this past fourth quarter you had a couple — you had really one thing happen that never happened before, especially with Verizon Wireless, and that was for the first time ever, because of the iPhone 5 launch, we had the 4 at free. So it was the first time ever you could get a free iPhone on the Verizon Wireless network.
So that produced a lot of volume for us. We had a lot of new customers come into Verizon who took that free phone, and that was great for us because again if you think about — we sold a lot of LTE product in the fourth quarter. We sold a lot of 3G product from the iPhone products in the fourth quarter.
But that is key for us, because if you think about our two networks it is important for me as I migrate people into the 4G network I still have this very large 3G network that operates very efficiently. We are not investing any more capital in that network other than to keep it up and running, so no more coverage capital, no more capacity capital.
If I can keep that network up and running that just generates more contribution margins for us. So it is critical for us to balance that. But, again, I think you had one point in time where you had a free phone, a free Apple phone that never happened before with us and that generated a lot of volume.”
Noting that more than 50 percent smartphone activations from Verizon during 2012 were iPhone, Shammo was asked what would be the chances of offering incentive to their employees for selling a device that does not belong to Apple that also comes with lower subsidies for the carrier. In response to this question Shammo said:
“The answer is, no, we don’t and it is critical that we don’t do that. The reason for that is because what is more important for us is when a customer walks into a store that customer walks out with a phone that they will be happy with and not return under our 30-day guarantee.
Because the worst thing that can happen for us is for me to incentivise 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.”
Source: 9to5Mac
Photo: Cnet
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