Verizon, T-Mobile, Apple close retail doors amid COVID-19, impacting carriers' Q1

Verizon and T-Mobile on Saturday said they would each be closing doors of some retail stores in response to the evolving COVID-19 pandemic. The closures follow Apple’s announcement Friday that it would close all retail stores outside of Greater China until March 27*, which Wells Fargo analysts said could impact subscriber growth this quarter. 

Verizon’s news about store closures came in a letter from CEO Hans Vestberg, which said as part of the next phase of its coronavirus response after implementing a work-from-home strategy, “we are reducing the number of Verizon stores that remain open.”

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A Verizon spokesperson did not immediately respond to questions about the number, location or duration of store closures. Verizon customers can still get support via online and mobile app channels or call center help.

“We know this is a difficult time, and to alleviate the impact that some of our customers may experience, earlier this week we announced that for the next 60 days, we will waive late fees our residential or small business customers may incur because of the economic circumstances related to the coronavirus,” said Vestberg.

T-Mobile said in response to guidance encouraging social distancing it would temporarily close all of its retail stores that are physically located inside a shopping mall, effective, Sunday, March 15. That includes T-Mobile and Metro by T-Mobile, as well as independent dealer stores.

The update noted that T-Mobile is “maintaining compensation for our teams and supporting our independent operators through the end of the month,” and will continue to monitor the situation.

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It is unclear how many T-Mobile stores are located within malls, and a company spokesperson did not immediately respond to FierceWireless inquiries.    

T-Mobile noted it’s increased cleaning and sanitization efforts in stores that remain open, and is supplying gloves for employees handling devices. Customers can still interact with T-Mobile digitally through mobile apps or calling T-Mobile Team of Experts. T-Mobile is offering free shipping on devices ordered online until May 13.

Impact on carriers’ Q1

A Monday research note from Wells Fargo said all carriers had made store closure announcements over the weekend (AT&T and Sprint spokespeople were not able to immediately confirm their respective store closures to FierceWireless.) following Apple’s move to shut stores, which will impact subscriber results in Q1 and potentially Q2.

AT&T closed six retail stores in San Diego earlier this month after a retail worker tested positive for the coronavirus, but it’s unclear if additional retail stores are closing as the outbreak in the U.S. continues to evolve quickly. 

Wells Fargo analysts led by Jennifer Fritzsche noted carriers don’t disclose what percentage of wireless gross adds sales happen via online versus retail channels.

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“We estimate the majority are still done through retail channels (either their own or - for iPhone users – through the Apple stores) vs. online,” wrote the Wells Fargo team. “These retail closures will clearly cause some disruption to sub growth in the back half of the Q1. Depending on how long these store closures last, it likely will have an impact on Q2 levels as well.”

The firm noted the COVID-19 impact on wireless remains “a fluid situation,” but on the flip side of disrupting subscriber growth, Wells Fargo anticipates fewer customers may switch carriers during this time, potentially reducing churn.

Churn had been up in the fourth quarter where there was a competitive environment that saw a lot of switching activity.

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While it’s too early to tell the exact impact of coronavirus on subscriber metrics in Q1 and Q2, the firm said “the offset to this is we expect there to be less switching activity (therefore less churn) seen during this period of disruption. We will continue to monitor this situation closely.”

Carriers have all taken steps to help customers maintain service and connectivity, including removing data caps, providing additional hotspot data, and not terminating service if customers are unable to pay their bills because of the coronavirus.

T-Mobile also increased capacity of its 600 MHz spectrum coverage by 58% through sharing agreements with Comcast and Dish for the next 60 days, and opened up expanded roaming access to Sprint customers.

Many companies are now implementing work-from-home policies, and Wells Fargo analysts said that as additional people stay home, the firm believes “more of the traffic increase will be felt on the WIRED (Wi-Fi) vs. traditional wireless networks.”

Event cancellations have also stacked up as the world works to contain the spread of COVID-19. On Monday states including New York and New Jersey implemented a ban on public gatherings of 50 people, following new CDC guidance, while Rhode Island restricted public gatherings to 25 people.

Update: Apple appears to have left this timeline more open-ended, with a notice on its website saying Tuesday that retail stores "are closed until further notice."