Verizon Loses Postpaid, Prepaid Phone Customers Q1
Verizon lost wireless customers in Q1, dropping 127,000 net postpaid phone customers, after gaining 271,000 in Q4. The company also dropped 263,000 retail postpaid phone customers. But Verizon executives reported progress Tuesday on the C-band build and on Fios broadband. Postpaid churn climbed to 1.15% in the quarter, from 0.95% in Q1 last year. This was the last quarterly report with Chief Financial Officer Matt Ellis who's leaving the company May 1.
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Last week AT&T reported 424,000 postpaid phone net adds (see 2304200059). T-Mobile reports Thursday.
Verizon now covers 200 million POPs with C band, CEO Hans Vestberg told investors. “Where we offer C band, we see significant benefits in fixed wireless access, consumer phone gross adds and retention, as well as premium take rates,” he said: “We also see 4G customers benefiting as we offload traffic in some markets to our 5G Ultra Wideband network.”
Verizon will get its next chunk of C band later this year and now covers only about 70 markets, of more than 400 where it’s active, Vestberg said. The carrier now uses an average of 60 MHz of mid-band spectrum per market but will be able to deploy an average of 160 MHz, and up to 200 MHz in some markets, he said.
With competition heating up, Verizon is following a steady strategy, Vestberg said. It's committed “not to compete on who can discount the most, but rather who can offer the most value to customers, the best overall experience and the best customer satisfaction,” he said.
Verizon has pursued affordable connectivity program customers and is interested in the broadband equity, access and deployment program, Ellis said: “We will look for where it makes the most sense for us to participate.”
Total revenue was $32.9 billion, down 1.9% over a year ago. Net income of $5 billion was 6.5% higher than last year but adjusted EBITDA of $11.9 billion was down 1.1%. Fios net adds increased to 67,000 from 60,000 a year ago. Fixed wireless access (FWA) net adds were 393,000, compared to 194,000 a year ago. In the consumer segment, FWA net adds of 256,000 were lower than the 262,000 in Q4.
MoffettNathanson’s Craig Moffett called the combined retail phone losses “shocking.” Like AT&T last week, “Verizon today reported results that speak to” a “challenging backdrop,” Moffett told investors: “The industry trends that matter now are almost all unwelcome ones. Subscriber growth is slowing. Promotionality is increasing. Cable is taking more and more market share. Even with only two of the Big Three having reported, it is clear that those trends continued, and worsened, in Q1.”
“While results aren’t great, expectations were low and Verizon is already down 4% since AT&T reported last Thursday,” said New Street’s Jonathan Chaplin: “We don’t expect a major move.” Verizon closed at $37.30 Tuesday, up 19 cents for the day.
Verizon repeated projected revenue growth of 2.5%-4.5% for the year, with up to $48.5 billion in adjusted earnings, said Livy Investment Research: “This leaves Verizon with much to do for the remainder of the year, which bodes unfavorably with the worsening economic backdrop” and “escalating execution risks ahead.”