Verizon Holds Its Ground Ahead of iPhone 12 Release -- 2nd Update
October 21 2020 - 12:03PM
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.
The carrier's upbeat outlook comes ahead of a potentially
competitive holiday shopping season. Apple Inc.'s newest iPhone 12
models, which go on sale in waves starting Friday, have prompted
aggressive promotions from cellphone carriers seeking to maintain
their market share. Verizon said the discounts will help its bottom
line by making it attractive for customers to upgrade their data
plans.
Verizon, the country's largest wireless operator 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.
The top three U.S. wireless operators have all started
advertising the ultrafast technology, though service remains patchy
and network upgrades aren't yet finished. Verizon's offers include
free iPhone 12s for new customers who trade in certain older
devices and $15 monthly payments for some existing subscribers with
trade-ins.
"We believe that we can have a long-term relationship with our
customers, and the way we do that is by getting the customer in the
first place," Verizon's finance chief, Matthew Ellis, said in an
interview. "Even with the promo upfront, it's value for the
customer and value for us as well."
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 its 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. Verizon said
about 90% of the 1.2 million customers who signed up for bill
relief had made some payment by the end of September and more than
half were paid in full.
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, which struck the deal with
parent company América Móvil SAB in September, expects to close the
transaction in the second half of 2021.
Write to Drew FitzGerald at andrew.fitzgerald@wsj.com
(END) Dow Jones Newswires
October 21, 2020 11:48 ET (15:48 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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