Verizon CEO Says This Is How Long Customers Will Wait to Upgrade Their Phones

It’s a big problem for telecommunications companies and others. Verizon Communications (VZ 0.57%) These days, consumers are not in a hurry to upgrade their phones. With inflation forcing people to stretch their budgets, one easy way to keep costs down is to resist the urge to upgrade a phone that works well and avoid the possibility of having to choose a more expensive phone plan.

Find out how long consumers are waiting to upgrade their phones and why that could soon change.

Consumers have been using their mobile phones for more than 36 months.

Verizon CEO Hans Vestberg recently told CNBC that customers are now keeping their phones for “36 months or more.” In the past, it was common to replace a phone every year. The company offers a 36-month promotion to help offset the cost of a new phone, but Bestbug says consumers are sticking with the product even after the promotional period ends.

Verizon extended the payment terms a few years ago, but there is still a possibility that customers can pay off their phones early. The long wait before consumers upgrade their phones is indicative of both the current economic climate and a lack of urgency to upgrade. Consumers do not see an incentive to upgrade early even after their phones are fully paid off.

Why the upgrade cycle may be coming soon

With recession fears growing, it doesn’t look like the economy will improve any time soon, but at least there may be an incentive for customers to upgrade their phones soon.

apologize Apple is releasing new phones with artificial intelligence (AI) features that could finally give consumers an incentive to upgrade their phones soon. Some of Apple’s new AI features could be released next year, but users will need to upgrade to the latest and most powerful iPhones to take advantage of them, including image creation and a more advanced assistant.

Critics believe Apple is doing this to force customers to upgrade, triggering what some call a potential upgrade “supercycle.” Not only will Apple benefit from more upgrades, but it will also be welcome news to Verizon and other carriers that lock customers into new contracts and plans.

In Verizon’s most recent quarter, which ended in June, total operating revenue was $32.8 billion, up just 0.6% from a year earlier, which the company blamed part of that on “lower upgrade volume.”

Should I Buy Verizon Stock?

An upgrade cycle, or “supercycle,” could be just what Verizon’s business needs to accelerate its growth and grab the attention of investors. The stock has fallen 28% over the past three years, making it a disappointing investment overall. As investors focus on growth stocks, Verizon has simply fallen out of favor with the market.

But with a high 6.5% dividend yield and potential catalysts for the top line, now may be a good time to add Verizon to your portfolio, before its growth rate improves and it gets on the radar of investors who may have been waiting for more reasons to invest in the stock. Verizon is not a powerful growth machine, but it could be a solid income stock to buy and hold for the long term.