Verizon reports strong 3Q results propelled by wireless customer growth

Highest third-quarter phone gross adds in five years, increased wireless net additions and EPS growth.

Verizon Communications Inc. notched large gains in phone subscribers in the third quarter, aided by a revamp of its unlimited data plans that shaved about $5 off customers’ monthly bills.

The carrier said it added 444,000 net new postpaid phone connections during the period, compared with 295,000 additions a year earlier. The latest figure handily exceeded a consensus analyst estimate of about 300,000.

3Q 2019 highlights

Consolidated:
  • $1.25 in earnings per share (EPS), compared with $1.19 in 3Q 2018; adjusted EPS (non-GAAP), excluding special items, of $1.25, compared with $1.22 in 3Q 2018.
Consumer:
  • Total revenue of $22.7 billion, an increase of 1.4 percent year over year.
  • 193,000 retail postpaid net additions, including 239,000 phone net additions, more than double the 112,000 phone net additions in third-quarter 2018, and 372,000 postpaid smartphone net additions.
  • Total retail postpaid churn of 1.05 percent, and retail postpaid phone churn of 0.79 percent.
  • 30,000 Fios Internet net additions.
Business:
  • Total revenue of $7.9 billion, approximately flat year over year.
  • 408,000 retail postpaid net additions, including 205,000 phone net additions.
  • Total retail postpaid churn of 1.22 percent, and retail postpaid phone churn of 0.98 percent.
Wireless (non-GAAP):
  • Total revenue growth of 2.6 percent year over year to $23.6 billion, driven by a 2.7 percent increase in service revenue.
  • 601,000 retail postpaid net additions, including 444,000 phone net additions, an increase from 295,000 phone net additions in third-quarter 2018, and 615,000 postpaid smartphone net additions, an increase from 510,000 postpaid smartphone net additions in third-quarter 2018. This growth was driven by a 10 percent year over year increase in phone gross additions.
  • Total retail postpaid churn of 1.09 percent, and retail postpaid phone churn of 0.82 percent.
Wireline (non-GAAP):
  • Total revenue of $7.1 billion, a decrease of 3.8 percent year over year.
  • 36,000 Fios Internet net additions; Fios total revenue growth of 2.3 percent year over year.

 

Verizon finance chief Matt Ellis said the subscriber momentum had continued into the current quarter and that additional customers should come from the recently announced partnership with Walt Disney Co. that will give people on unlimited data plans a year of free access to the new Disney+ streaming service.

Americans’ cellphone bills are falling as carriers compete for customers in a saturated market and as cable companies offer lower-cost competing services. In September, the consumer-price index for wireless phone service—an indicator of current offers from providers—fell 2.8% from a year earlier, the 13th straight month of declines, according to the Labor Department.

Carriers are also increasingly offering such perks as video and music streaming.

Meanwhile, the company is trying to shed costs, aiming to cut $10 billion by 2021. It said it has achieved $4.6 billion in savings since last year.

UBS Group AG analysts estimate that there are about 17 million Verizon wireless customer accounts eligible for the free Disney+ offer. The streaming service, which would normally cost $6.99 a month, is scheduled to launch Nov. 12.

AT&T is working on its own streaming video service called HBO Max that it plans to unveil next week and formally launch next year. AT&T has aggressively pursued content ownership and creation and is in the throes of a battle with activist Elliott Management over its strategy.

Verizon reported 118.65 million wireless connections, including tablets, smartwatches and other devices, up from 118.12 million at the end of June.

 

 

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