Verizon Communications Inc today raised its 2019 profit forecast and beat Wall Street estimates for quarterly profit as it focuses on cost cuts and manage monstrous debt, but the U.S. based wireless carrier lost more phone subscribers than analysts had expected.
Verizon revealed it now expects low single-digit percentage growth in adjusted profit, after previously saying that its 2019 profit would be similar to what it reported a year earlier.
Verizon Chief Financial Officer Matt Ellis said profit margins in the company’s core wireless business was depressed by accounting changes during the first quarter. Without the items, “the business performed really well,” Ellis said in an interview.
The company also revealed it lost a net 44,000 phone subscribers in the first quarter, which was characterized by few price promotions. Analysts had expected a net loss of 25,000 subscribers, according to research firm FactSet.
Verizon launched its 5G mobile network in two cities in the US last month at an additional cost of $10 for customers with existing so-called “unlimited plans”. It plans to spend $17 billion to $18 billion this year to build its 5G network.
Net income rose to $5.03 billion, or $1.22 per share, in the first quarter ended March 31 from $4.55 billion, or $1.11 per share, a year earlier.
On an adjusted basis, Verizon earned $1.20 per share, beating analysts’ estimates of $1.17, according to IBES data from Refinitiv.
Revenue for Verizon Media Group, which was formerly called Oath and includes the Yahoo and AOL media brands, was $1.8 billion during the quarter, a decline from the previous year as the company earned less revenue from advertising.
The company lost a net 53,000 Fios video customers during the quarter, as viewers continue to shift to cheaper streaming services. Analysts had expected it to lose just 40,000 video customers, according to FactSet.