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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