Verizon falls well short of Wall Street's prediction of net new phone subscribers during Q2
On Friday, Verizon released its quarterly earnings report for the second quarter and the nation's largest wireless carrier reported a 9.1% year-over-year gain in Verizon Consumer revenue to $25.6 billion. That figure was helped along by the acquisition of TracFone, higher equipment revenue, and revenue growth in the company's core wireless service. The inclusion of revenue from TracFone, combined with an increase in the Average Revenue Per Account (ARPA) helped hike consumer wireless revenue by 10.5% on an annual basis.
Verizon's gain of net, new postpaid phone subscribers fell well short of analyst's estimates
While analysts were expecting the wireless provider to announce that 167,000 net new postpaid phone subscribers had joined Verizon over the three months, the actual number reported by Verizon for the quarter was a gain of only 12,000 net new postpaid phone subscribers. The postpaid phone churn rate was .81% while the total postpaid churn was 1.03%.
Verizon lowered the range of its estimated net income for the entire year
Verizon Chairman and CEO Hans Vestberg said during yesterday's earnings call, "The inflationary environment is clearly impacting consumer behavior, and we also saw intensified competition for consumer attention." The quarter, he said, was "not a good barometer for where Verizon has been or where it’s going."
The executive also said, "As the market leader, in a very competitive industry, we are determined to improve our operational and financial performance for the second half of the year. With our network-as-a-service foundation, our new consumer mobility plans, and recent pricing actions, we are being deliberate in our decisions to improve our profitable growth opportunities today and into the future."
Verizon lowered its estimate of 2022 wireless service growth to a range between 8.5% and 9.5%, down from the previous forecast of a 9% to 10% gain. The company also expects to spend an additional $5 billion to $6 billion in additional expenditures related to the carrier's 5G C-band spectrum.
In the range between 3.7GHz to 4.2GHz, the C-band is considered mid-band spectrum and while it isn't as fast as mmWave spectrum, it travels farther than the latter making it accessible to more subscribers. Verizon used to reserve its Ultra Wideband 5G designation to its mmWave spectrum that delivers download data speed as fast as 1Gbps. But since mmWave signals travel short distances only, finding this coverage was like finding a needle in a haystack.
Verizon makes a change to its 5G service tiers making Ultra WideBand 5G accessible to many more subscribers
So Verizon changed things up by calling its C-band spectrum Ultra Wideband 5G. That means more Verizon customers (using phones with C-band support) now see the 5G UW icon on their phone's status bar in the upper right corner of the display.
Thanks to the C-band and a shrewd move by Verizon, more subscribers now access the carrier's Ultra Wideband service
This writer, a Verizon subscriber, recently connected to Verizon's 5G Ultra Wideband service for the first time in Salem, Massachusetts this past week. A quick tap on Ookla's Sppedtest showed that I was getting a download data speed of nearly 400Mbps.
Total operating revenue rose .1% to $33.79 billion from the year ago's $33.76 billion. Net declined 10.7% from $5.95 billion or $1.40 per share to $5.32 billion or $1.24 per share. For the six months ended in June, total operating revenue came in at $67.34 billion versus the prior year's $66.63 billion. That is a 1.1% increase.
Net income for the first half of the year weighed in at $10.03 billion (or $2.33 per share) vs. $11.33 billion (or $2.67 per share). That was a decline of 11.5%. Verizon lowered its earnings estimates for the entire year to a range of $5.10 to $5.25 for adjusted earnings per share, down from its prior guidance for adjusted EPS of $5.40 to $5.55.
"Although recent performance did not meet our expectations, we remain confident in our long-term strategy," said Verizon Chief Financial Officer Matt Ellis. "We believe that our assets position us well to generate long-term shareholder value." Speaking of value, Verizon's shares declined $3.21 or 6.74% on Friday to $44.45. In after-hours trading, the stock added 3 cents to $44.48.
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