Verizon move to unlimited data comes from a 'point of weakness,' analyst says

Chaplin: Verizon unlimited data not great news on two fronts

Verizon is reviving its unlimited data plan — a plan it killed in 2011 — in what seems to be a desperate move to claw back market share, said analysts.

In the past, Verizon has said offering an unlimited data plan does not make sense and that the other carriers were giving away future growth and now they are doing it, said Jonathan Chaplin, New Street Research analyst.

"The are doing it in response to what were a pretty weak set of results in the fourth quarter that have probably only gotten worse in the first quarter," he said.

Verizon launched an unlimited offering for $80 for a single-line and $45 for a four line account, a little more expensive than the unlimited offerings from rivals Sprint and T Mobile, but at a slight discount to AT&T's offering.

To make matters worse, they are the least well-positioned to do this, he said.

Verizon brings back unlimited data plan

"They have got less capacity than anyone else," he said. "They have got about half the available capacity per subscriber of T Mobile and AT&T and about a third of the available capacity of Sprint, so this is just going to exacerbate the network issues relevant to the other guys."

"This is from a point of weakness that they are making his move," said Cowen & Co. analyst Colby Synesael. Cowen has a hold rating on the stock and a $49 price target.

It would be better if Verizon was being more proactive instead of simply responding to competition, he said. Their market share has being going down over the past year, reversing a trend of beating rivals in terms of new subscribers over the past several years.

Verizon has added around 100,000 new subscribers over the past year, while rivals T Mobile and Sprint added 1.9 million subscribers and 800,000 subscribers respectively.

"Clearly they were in a position where the did have to do something," said Synesael.

T Mobile CEO John Legere had this response to Verizon's move.


Lowell McAdam, Verizon CEO
Michael Newberg | CNBC