Verizon Boosts Subscribers, Aided by New Pricing Plans -- 3rd Update
October 25 2019 - 10:53AM
Dow Jones News
By Sarah Krouse
Verizon Communications Inc. notched large gains in phone
subscribers in the third quarter, aided by a revamp of its
unlimited 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 the 295,000 such
connections it added a year earlier. Those new phone connections in
the third quarter handily exceeded analysts' consensus estimates of
about 300,000.
Postpaid customers are considered lucrative for carriers because
those subscribers typically pay their bills monthly under
longer-term contracts.
Matt Ellis, the company's finance chief, said that momentum had
continued into the fourth quarter and that Verizon expects to
attract additional customers through its recently announced
partnership with Walt Disney Co. to offer people on unlimited data
plans a year of free access to the new Disney+ streaming
service.
Wireless promotional activity picked up during the period, which
included the launch of Apple Inc.'s iPhone 11. Carriers rolled out
buy-one-get-one-free offers and other deals in September.
Americans' cellphone bills are falling as carriers compete for
customers in an ultra-saturated market and cable companies
increasingly offer lower-cost, competing services. The
consumer-price index for wireless phone service -- an indicator of
current offers from cellphone service providers -- fell 2.8% in
September from a year earlier, the 13th straight month of declines,
according to the Labor Department.
Carriers are also increasingly offering additional perks such as
video and music streaming.
Verizon, the largest U.S. carrier by subscribers, is the first
big wireless company to report earnings for the period. AT&T
Inc. and T-Mobile US Inc. are scheduled to release their results
Oct. 28, while Sprint Corp. hasn't yet announced a date.
Verizon is trying to prove to Wall Street that it can be more
than a connectivity pipe and can find ways to monetize the faster
5G service it is rolling out. Early reviews of its 5G service have
been mixed because it is ultrafast but has a limited reach.
The company said Friday it would bring 5G service to Omaha and
Dallas for a total of 15 cities so far this year. It has promised
to bring the service to 30 cities by the end of the year and said
it was on track to meet that goal.
Meanwhile, the company is trying to shed costs, promising to cut
$10 billion by 2021. It said it has achieved $4.6 billion of that
total since last year.
Verizon has largely balked at buying into Hollywood or directly
competing in the streaming wars as rival AT&T has, opting
instead to form partnerships with content providers.
Verizon's Disney+ offer gives Disney a large pool of viewers as
it launches and could help Verizon retain current customers and
draw more subscribers to its unlimited plans, a priority for the
company.
Hans Vestberg, the carrier's chief executive, said the agreement
proved the model of partnering with top brands that Verizon had
decided to pursue.
UBS Group AG analysts estimate that there are about 17 million
Verizon wireless customer accounts eligible for the Disney+ offer.
The streaming service would normally cost $6.99 a month and is
scheduled to launch Nov. 12.
AT&T, meanwhile, 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 had 118.65 million wireless connections, including
tablets, smartwatches and other devices, up from 118.12 million at
the end of June.
About half of its wireless customers are now on unlimited plans,
executives said, an increase from just below that threshold last
quarter. Verizon is trying to move more of its customer base to
unlimited plans, hoping that subscribers will move up through its
tiers of service over time.
Verizon's cable offering, Fios video service, continued to lose
customers. It shed 67,000 customers in the third quarter.
Overall, net income attributable to Verizon was $5.19 billion,
up from $4.92 billion a year earlier. Quarterly revenue edged up
slightly to $32.9 billion from $32.6 billion a year ago.
Revenue within Verizon's media unit, which includes the Yahoo
and AOL properties it acquired, was $1.8 billion, down 2% from a
year ago.
Verizon shares rose 0.8%, to $61.07, in premarket trading.
Write to Sarah Krouse at sarah.krouse@wsj.com
(END) Dow Jones Newswires
October 25, 2019 10:38 ET (14:38 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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