Verizon Revenue Falls Again on Drop-Off in Subscriber Additions
January 24 2017 - 8:47AM
Dow Jones News
By Anne Steele
Verizon Communications Inc. posted another decline in revenue
amid a continued drop-off in subscriber additions as a pricing war
continues to drag on the wireless provider's results.
It was the third consecutive quarterly decline for the top line
after six years of growth, and Verizon shares lost 2% premarket to
$51.39.
Verizon, which has been chasing revenue growth through
acquisitions, in July said it would buy Yahoo Inc.'s Web assets for
$4.83 billion in cash, ending a drawn-out process for the
beleaguered internet company. For New York-based Verizon, the deal
adds another piece to the digital media and advertising empire it
is trying to build.
But on Monday Yahoo said the deal will close a quarter later
than expected, as both sides grapple with the fallout of two
massive data breaches disclosed by the internet company. The hacks,
announced in September and December, have cast a shadow over the
future of Verizon's agreement to buy Yahoo's core internet
business.
On Tuesday, Verizon said it "continues to work with Yahoo to
assess the impact of data breaches."
"We enter 2017 with confidence, based on our investments in
next-generation networks and the new capabilities we have
acquired," said Chief Executive Lowell McAdam.
During the December period, Verizon said it added 591,000 net
retail postpaid wireless subscribers, a 61% drop from the
prior-year period. Postpaid churn, or the rate at which customers
canceled service, rose 14 basis points to 1.10% from a year
ago.
Revenue slipped 5.6% to $32.34 billion, edging in above
estimates for $32.11 billion, according to Thomson Reuters.
In all, Verizon posted a profit of $4.5 billion, or $1.10 a
share, down from $5.39 billion, or $1.32 a share, a year
earlier.
Excluding certain items related to pension and benefits
adjustments and severance-related costs, adjusted earnings were 86
cents a share, below analysts' expectations for 89 cents a
share.
Verizon's Fios TV and high-speed internet business, which had
been lagging, continued to recover. Verizon added a net 68,000
internet customers in the quarter and gained 21,000 video
customers.
Verizon has been shifting its wireless customers to noncontract
plans that have a cheaper monthly service rate but require
customers to pay full price for their device, usually in
installments.
The percentage of phone activations on installment plans rose to
77% from 70% in the third quarter and 67% a year earlier. Verizon
said it expects that rate to remain consistent in the first
quarter.
Verizon, which has been facing rising competition, had warned
that earnings could plateau in 2016 as it works through changes it
has made to keep its wireless plans in line with rivals. On
Tuesday, the company said it expected its 2017 earnings to be flat
with 2016.
Write to Anne Steele at Anne.Steele@wsj.com
(END) Dow Jones Newswires
January 24, 2017 08:32 ET (13:32 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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