Carrier added 444,000 net new postpaid phone connections in third quarter
Verizon Communications Inc. notched large gains in phone subscribers in the third quarter, aided by a revamp of its unlimited data plans that shaved about $5 off customers’ monthly bills.
The carrier said it added 444,000 net new postpaid phone connections during the period, compared with 295,000 additions a year earlier. The latest figure handily exceeded a consensus analyst estimate of about 300,000.
Postpaid customers are considered lucrative for carriers because those subscribers typically pay up monthly under longer-term contracts.
Verizon finance chief Matt Ellis said the subscriber momentum had continued into the current quarter and that additional customers should come from the recently announced partnership with Walt Disney Co. that will give people on unlimited data plans a year of free access to the new Disney+ streaming service.
Wireless promotional activity picked up during the period, which included the launch of Apple Inc.’s iPhone 11. Carriers rolled out buy-one-get-one-free offers and other deals in September.
Americans’ cellphone bills are falling as carriers compete for customers in a saturated market and as cable companies offer lower-cost competing services. In September, the consumer-price index for wireless phone service - an indicator of current offers from providers - fell 2.8% from a year earlier, the 13th straight month of declines, according to the Labor Department.
Carriers are also increasingly offering such perks as video and music streaming.
Verizon, the largest U.S. carrier by subscribers, is the first big wireless company to report earnings for the third quarter. AT&T Inc. and T-Mobile US Inc. are scheduled to release their results Oct. 28. Sprint Corp. hasn’t yet announced a date.
Verizon is trying to convince Wall Street that it can be more than a connectivity pipe and can find ways to monetize the 5G service it is rolling out. Early reviews of the service have been mixed—it is ultrafast but has a limited reach.
The company said Friday it would bring 5G service to Omaha and Dallas for a total of 15 cities so far this year. Its target is 30 cities by year end and it said it was on track to meet that goal.
Meanwhile, the company is trying to shed costs, aiming to cut $10 billion by 2021. It said it has achieved $4.6 billion in savings since last year.
Verizon has largely balked at buying into Hollywood production or directly competing in the streaming wars as AT&T has, opting instead to form partnerships with content providers.
Verizon’s Disney+ offer, which gives Disney a large pool of potential viewers as it launches, could help the Verizon retain current customers and draw more subscribers to its unlimited plans, a priority for the company.
Hans Vestberg, the carrier’s chief executive, cited the agreement as the model of partnering with top brands that Verizon had decided to pursue.
UBS Group AG analysts estimate that there are about 17 million Verizon wireless customer accounts eligible for the free Disney+ offer. The streaming service, which would normally cost $6.99 a month, is scheduled to launch Nov. 12.
AT&T is working on its own streaming video service called HBO Max that it plans to unveil next week and formally launch next year. AT&T has aggressively pursued content ownership and creation and is in the throes of a battle with activist Elliott Management over its strategy.
Verizon reported 118.65 million wireless connections, including tablets, smartwatches and other devices, up from 118.12 million at the end of June.
About half of its wireless customers are now on unlimited plans, executives said, an increase from just below that threshold in the preceding quarter. Verizon is trying to move more of its customer base to unlimited plans, hoping that subscribers will move up through its tiers of service over time.
Verizon’s cable offering, Fios video service, continued to lose customers. with 67,000 departing in the third quarter.
Overall, net income attributable to the company was $5.19 billion, up from $4.92 billion in 2018’s third quarter. Revenue edged up to $32.9 billion from $32.6 billion.
Revenue within Verizon’s media unit, which includes the Yahoo and AOL properties it acquired, was $1.8 billion, down 2% from a year earlier.