Verizon’s chief financial officer has raised concerns about a trend in the telecommunications giant’s customers.
As the cost of living continues to surge worldwide, Verizon's chief financial officer Tony Skiadas revealed that mobile customers in the U.S. are now opting to hold onto their phones for a longer period.
A brand-new phone can cost anywhere between $500 and $1,500, and a recent WalletHub survey showed 63 per cent of Americans would not buy a new cell due to inflation.
Aside from the substantial expense, Skiadas said one other reason people were hesitant to upgrade as often is that phones are now “made better.”
“Customers continue by choice to hang onto their phones for longer periods of time”, Skiadas told the Morgan Stanley Technology, Media & Telecom Conference earlier this month. “The average upgrade cycle for us is just over 40 months, it’s like 42 months right now.
“So we’re coming off a couple of years now where there have been declines in uptake. As always, we might see seasonality in that.”
Nevertheless, Verizon continues to grow its business, earning $27.6 billion in total consumer revenue, a 2.2% increase on the year before, The Street reported. And the CFO told the conference Verizon would “continue to be disciplined in our approach to retention”, despite the shift in consumer habits.
When pressed on whether they were experiencing a “supercycle” - a period of strong economic growth with typically strong demand for commodities - he replied “no”.
The latest data from the Social Security Administration, as of 2023, suggest that the average salary in the U.S. is $66,622. Unlike many cost-of-living expenses, new cellphones cost the same nationwide.
Wallethub analyst Chip Lupo said: “This year, consumers are holding off on upgrading their phones, as 63% of people say they won’t buy a new phone due to inflation. When day-to-day living costs are already high, it’s hard for many people to justify an expensive phone upgrade.
“In fact, nine in 10 Americans think iPhones are overpriced, so Apple and other phone companies may need to consider lowering prices or offering more substantial feature differences between models to entice customers.”
