Verizon is feeling the pressure of increased competition across the wireless market.
The carrier on Thursday reported lower than expected revenue and a drop in profits as subscriber additions fell off a cliff.
Verizon reported third-quarter Earnings Per Share (EPS) of 89 cents, compared with 99 cents per share in the same quarter last year. Total operating revenues in the third quarter dropped 6.7 percent annually to $30.9 billion.
Verizon reported just 442,000 retail postpaid net additions in the quarter. That’s compared to 1.2 million retail postpaid net additions in the year-ago quarter, and 615,000 last quarter. Verizon’s total retail postpaid connection base now stands at 108.2 million, while prepaid came in at 5.5 million connections.
Total wireless revenue totaled $22.1 billion for the quarter, a decline of 3.9 percent compared with the year-ago quarter.
During a morning earnings call Thursday, Verizon CFO Fran Shammo said that upgrades were negatively impacted by the recall of Samsung’s Note 7. Shammo also noted that Verizon experienced an iPhone 7 backlog primarily for upgrades.
Shammo said that Verizon has approached 2016 with an eye toward protecting its “high-quality” base, with an expectation that earnings and subscriber adds might plateau.
“It’s going to be slower growth for the entire industry as it gets more densified,” Shammo said.
Shammo also addressed new unlimited offerings from competitors, saying that Verizon did see an impact for a two to three week period immediately after those offers were launched.
“But then it kind of normalized,” Shammo said. “Once we got through that, we were off to a really good start with the release of the Samsung Note 7 and then unfortunately there was a recall of that, which definitely impacted our growth because historically Verizon has always been the leader in high-end Samsung phones.”
Verizon expects adjusted earnings to be at a level comparable to 2015, excluding a 7-cent-per-share impact of the 2016 work stoppage. Consolidated capital spending for 2016 is pegged at the low end of the range of $17.2 billion to $17.7 billion.
