Verizon Holds Its Ground Ahead of iPhone 12 Release -- Update
October 21 2020 - 10:02AM
Dow Jones News
By Drew FitzGerald
Verizon Communications Inc.'s wireless and broadband businesses
stabilized in the third quarter despite the lasting effects of the
coronavirus pandemic, allowing the company to upgrade its profit
target for the year.
Consumers have changed phone plans less frequently in the past
nine months compared with the prior year, but industry analysts
expect competition will heat up in the final months of the year
following the release of Apple Inc.'s newest iPhone 12 models,
which go on sale in waves starting Friday.
The country's largest cellphone carrier in terms of subscribers
added 283,000 postpaid phone connections during the three-month
period ended Sept. 30, maintaining its lead over rivals T-Mobile US
Inc. and AT&T Inc.
Investors often track postpaid phone plans that charge customers
after service is provided to gauge wireless companies' health.
Carriers value postpaid subscribers because they switch providers
less often than prepaid customers.
More cellphone stores have reopened after earlier closures, and
some are offering aggressive discounts for the iPhone 12, which can
connect to new 5G networks.
Verizon Chief Executive Hans Vestberg joined an event last week
to unveil Apple's four iPhone 12 models and announced plans to
expand Verizon's high-speed 5G coverage, which had been limited to
major cities for most of the year.
Verizon on Wednesday raised its annual adjusted per-share profit
target amid improving results over the past nine months. The
company said it expects flat to 2% growth in that metric, narrowing
the negative 2% to 2% range it issued earlier.
Quarterly net income attributable to Verizon still fell to $4.36
billion, or $1.05 a share, from a year-earlier $5.19 billion
profit, or $1.25 a share. The latest result included a $1.1 billion
pretax accounting charge after the company readjusted its estimated
pension liabilities.
Revenue fell 4.1% to $31.5 billion as the carrier sold fewer
phones compared with the year-ago period, when the new iPhone
models launched earlier. Wireless service revenue edged up 0.3% to
$16.4 billion. Verizon ended the third quarter with 120.3 million
wireless connections, which include smartphones and other devices
like watches and tablets.
The company posted a net gain of 110,000 broadband customers as
installations of high-speed Fios service surged.
Sales in its media unit, which includes websites like AOL and
Yahoo, slipped 7.4% to about $1.7 billion. The company said the
division continued to experience weaker traffic from search and
website visits during the pandemic but saw activity improve during
each of the past three months.
The coronavirus has widened the divide between rich and poor in
the U.S., boosting demand from some consumers while straining the
bank accounts of many others who remain unemployed. A Verizon
spokeswoman said about 90% of the 1.2 million customers who signed
up for bill relief had made some payment by the end of
September.
Verizon's customer base is skewed toward higher incomes, though
the company could add more low-cost prepaid plans through its
nearly $7 billion purchase of TracFone, which owns brands such as
StraightTalk and Simple Mobile. Verizon said it expects the deal,
which was agreed with parent company América Móvil SAB in
September, to close in the second half of 2021.
Write to Drew FitzGerald at andrew.fitzgerald@wsj.com
(END) Dow Jones Newswires
October 21, 2020 09:47 ET (13:47 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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