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Monday, March 04, 2013, 07:08 pm PT (10:08 pm ET)

Verizon CFO lauds iPhone, says no plans to incentivize selling rival low-subsidy handsets

Verizon Communications Chief Financial Officer Fran Shammo said on Monday that Apple's free-on-contract iPhone 4 produced "a lot" of volume for America's Verizon Wireless, and despite high subsidy costs, the telecom will not offer incentives for sales staff to push low-cost alternatives.

Fran Shammo

Verizon Communications CFO Fran Shammo.


Shammo made the comments during the Deutsche Bank 2013 Media, Internet & Telecom Conference earlier today, in which he fielded a few questions pertaining to the performance of Apple's iPhone on Verizon's U.S. network.

It was announced in January that Apple's iPhone accounted for 6.2 million of the 9.8 million smartphones Verizon activated in the fourth quarter of 2012, the strongest period of sales since the carrier starting selling the handset in 2011.

According to Shammo, the uptick in iPhone customers was mostly in thanks to the iPhone 4 price drop, which allowed Verizon to offer a free-on-contract Apple smartphone for the first time. The handset led to strong growth in 3G subscriber numbers, an important point given that the company is no longer investing in building out that network. All capital allocated to Verizon's 3G services are for maintenance only, Shammo said.

As for subsidies, the CFO was asked whether he would incentivize Verizon's salesforce to sell low-subsidy units in an attempt to manage margins. Shammo was against such practices, saying it is important that customers leave a Verizon store with the device they want.

"The worst thing that can happen for us is for me to incent [sic] 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," Shammo said, according to a transcript (PDF) provided by Verizon. "Therefore, now I've just subsidized two smartphones because that phone you used I can't resell as a new phone."