Verizon Revenue Falls Short of Estimates Due to Fewer Equipment Upgrades

Verizon's Revenue Falls Short of Expectations Amid Sluggish Equipment Upgrades

Verizon Communications Inc. has reported a disappointing operating revenue that fell short of analyst predictions, attributed largely to a decrease in the number of people upgrading their wireless equipment. The total operating revenue for the period stood at $32.8 billion, which marked a less than 1% increase from the previous year. Analysts had anticipated a higher figure of $33.1 billion on average. As a result, the company's shares experienced a dip of up to 7% on Monday morning in New York, marking the steepest decline in over a year.

Surprising Gains Amidst Overall Weak Growth

Despite the underwhelming revenue growth, Verizon did report unexpected gains in wireless phone customers and an increase in fixed wireless broadband internet users. Wireless service revenue for the three months ending in June was $19.8 billion, which is a 3.5% increase and aligns with analyst expectations. Impressively, Verizon added 148,000 wireless retail postpaid phone customers, surpassing the estimated 118,000. This growth can be attributed to Verizon's strategy of offering bundled plans with services like Netflix, Hulu Max, Disney+, and Apple bundles for an additional $10 a month to retain subscribers.

Focus on Fixed Wireless Broadband

The New York-based carrier has been significantly focusing on its fixed wireless product, which provides high-speed internet through airwaves instead of traditional lines. The company added 218,000 consumer subscribers in the second quarter—an increase of 7.4% compared to the first quarter—and signed on 160,000 business customers, the highest quarterly result to date. This brought Verizon’s total fixed wireless customer base to more than 3.8 million, a nearly 69% increase from the previous year. The growth in fixed wireless has been critical in countering an overall decline in broadband subscribers following the conclusion of the Affordable Connectivity Program, which previously offered discounts on broadband services to low-income households.

Broadband and Financial Performance

Verizon reported total broadband net additions of 391,000 in the second quarter, a 6.5% decrease from the same period last year. However, this figure still beat market estimates, bolstered by gains in both fixed wireless and Fios wired products. Adjusted earnings stood at $1.15 per share, meeting analyst expectations. For the year, Verizon maintained a positive outlook, projecting wireless service revenue growth between 2% and 3.5% and adjusted earnings per share of $4.50 to $4.70.

Thus far in the year, Verizon shares have increased by approximately 10%, yet they continue to lag behind competitors AT&T Inc. and T-Mobile US Inc., both of which have seen around a 14% rise in the same timeframe.