T-Mobile US and Verizon CFOs warned a commitment to halt disconnections and waive fees during the Covid-19 (coronavirus) pandemic would take a hefty financial toll in Q2.
In March, more than 700 service providers promised the Federal Communications Commission they would pause disconnections for non-payment, waive late fees and open Wi-Fi hotspots to the public until 12 May (subsequently extended to 30 June).
At an investor conference, T-Mobile CFO Braxton Carter (pictured) noted the operator expects to accrue charges of between $75 million and $125 million related specifically to the pledge during this quarter.
He added it was taking several steps to lessen the blow, including making alternative arrangements with customers unable to pay in full, deferring economic impact payments, and amending tariffs: “Our pledge is connectivity, our pledge isn’t everything in our richest rate plans to everybody and that’s a way to place people who are really under economic distress with core connectivity.”
“We’re doing our part but we’re also reducing exposure.”
In a separate session, Verizon CFO Matt Ellis said it expects service revenue growth rates to be 3 per cent to 5 per cent lower “than they otherwise would have been”, with the government pledge accounting for roughly half of the reduction.
By mid-April, approximately 800,000 customers told the operator they intended to take advantage of the packages available, though Verizon noted this was less than 2.5 per cent of its subscriber base.Subscribe to our daily newsletter Back