Verizon (VZ, Financial), the No. 1 wireless carrier in the U.S., posted strong numbers during the third quarter as the company managed to add 603,000 retail postpaid customers. The U.S. wireless market has become intensively competitive due to T-Mobile’s (TMUS, Financial) surging subscriber numbers, but the No. 1 player proved that it still has what it takes to keep its flock together and push for growth.
“Verizon Wireless delivered another quarter of profitable growth combined with strong customer loyalty,” said Chairman and CEO Lowell McAdam. “This success is based on the strength of the Verizon network, and I share the pride of all Verizon employees that our network aided and served first responders and customers when they needed it most following the recent natural disasters.
“While steadily investing to advance our network leadership and to build the Verizon Intelligent Edge Network, we have also maintained the financial flexibility to increase shareholder dividends for an 11th consecutive year.”
Verizon reported adjusted earnings per share of 98 cents, in line with market expectations, while revenue hit $31.72 billion, slightly above the market expectation of $31.45 billion. The one area where Verizon blew things out of the water was net retail postpaid adds, which came in at 603,000, a full 165,000 more than the market was expecting.
The wireless segment remains the most important one for Verizon as it brings in the bulk of Verizon’s net revenue. Total retail connections, postpaid as well as prepaid, hit 115.2 million, an increase of 1.4% during the third quarter. A closer look would show you that Verizon’s postpaid net add numbers increased by 36.4% during the quarter, but when you look at the first nine months of the current year’s numbers, it still shows a drop of 46.4%.
Source: Verizon Q3 Reports
Verizon lost a lot of customers to competition during the first half of the year, and now it is getting them back in double digits. There were several factors that helped Verizon during this quarter: the launch of new iPhones, the growth of unsubsidized plans and the introduction of Verizon’s unlimited plans all helped Verizon wrest back subscribers from the competition during the third quarter.
In the wireline segment, Verizon has already started to feel the effect of cord cutting. The company lost 18,000 Fios Video connections while adding 66,000 Fios Internet connections. Verizon closed the third quarter with 5.8 million Fios Internet connections and 4.6 million Fios Video connections, and this segment will continue to be under pressure since Verizon does not yet have a streaming video service of its own. Bloomberg recently reported that the company’s plans to launch its own streaming TV service have been delayed until spring 2018 so obviously we’re not going to see any gains from that for awhile.
Verizon’s third-quarter results have clearly shown the market that the company does have what it takes to compete despite being the largest player in the wireless segment, and that is certainly going to have a positive impact on sentiment, allowing the stock to move up in the short term.
Disclosure: I have no positions in the stock mentioned above and no intention to initiate a position in the next 72 hours.
