Verizon delivered a pleasant surprise in its earnings report Thursday, posting strong net postpaid phone additions of 358,000 and consolidated revenue that beat Wall Street expectations.
The headlining figures from Verizon’s report certainly came in the area of net additions, where the carrier raked in 614,000 postpaid net additions, including the aforementioned 358,000 handset net adds. Those figures compared to 86,000 net phone additions in the second quarter of 2016, and Wall Street’s consensus prediction of 56,000 net adds. CFO Matt Ellis noted Verizon was able to grow its retail postpaid base by 1.2 percent year over year to 109.1 million.
“(Verizon) promised a better Q2 than Q1 – and delivered,” Wells Fargo Senior Analyst Jennifer Fritzsche wrote. “Q2 highlight was much better in terms of postpay phone adds – impressive stat especially given the amount of competitive behavior seen in the marketplace in the quarter.”
The net add figures were helped along not only by Verizon’s unlimited offering, Ellis said, but also by record-low churn levels. The carrier reported retail postpaid phone churn of 0.70 percent, and overall postpaid churn of 0.94 percent that tied Verizon’s all time low from last year.
Consolidated revenue of $30.55 billion was up slightly year over year from $30.53 billion, and also beat analyst expectations by some $590 million.
On the wireless side specifically, equipment revenues were up 16 percent year over year to $4.3 billion. Ellis indicated around 77 percent of phone activations during the quarter were made on device payment plans, and just under half (49 percent) of postpaid phone customers had a device payment plan at the close of the period.
Verizon shares jumped 6 percent on the news. But not all the metrics looked quite so good.
Wireless service revenues of $15.6 billion were down 6.7 percent year over year, and total wireless revenues were down 1.9 percent to $21.3 billion. Operating income was also down 7.6 percent to $7.4 billion. Additionally, the carrier’s average revenue per account (ARPA) not including device billings was down 7 percent to $134.89.
“That today’s results will almost certainly be viewed as ‘very good’ says more about just how bearish sentiment has become in U.S. Wireless than it does about the business itself,” MoffettNathanson analysts posited. “By any objective measure, Verizon continues to struggle in a wireless business that is generally inhospitable … If they can persuade investors that network advantage is still possible, and that it still matters, and if they can persuade investors that they can achieve network advantage without a dilutive acquisition, expecting something more than just stopping the bleeding might not be so unreasonable.”