Finance

Verizon's profit sinks as it loses wireless subscribers

Verizon's profit sinks as it loses wireless subscribers

T-Mobile responded with other perks, such as free data when traveling overseas and when watching video from major streaming services in the U.S. T-Mobile ultimately turned to unlimited plans, as did Sprint, forcing Verizon to resurrect something it had ditched almost six years ago.

Churn, or customer defections, among wireless retail customers who pay bills on a monthly basis, increased to 1.15 percent of total wireless subscribers, compared with the average analyst estimate of 1.03 percent, according to FactSet. T-Mobile is largely responsible for the return of unlimited data plans to the U.S. mobile market, as T-Mobile's popular unlimited plan forced Verizon to offer one of its own.

The companies initially agreed to a $4.8 billion deal, but in February, Verizon lowered the price to $4.48 billion, according to a filing with the Securities and Exchange Commission. Total revenue has now declined four quarters in a row. Wireless bills are a major household expense, and their continued decline had a big impact on March's surprising 0.3% drop in the consumer-price index.

On Thursday, the company predicted its full-year 2017 sales to be "fairly consistent" with those in 2016, with improvements being made in wireless service revenue and equipment revenue trends.

Verizon Communications (NYSE:VZ) traded down 1.747% during midday trading on Thursday, reaching $48.085. It means "more gas in my auto".

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But industry analysts have wondered if the company will pursue a more transformative deal as its main competitor AT&T Inc seeks to diversify its business through a planned acquisition of Time Warner Inc. But Verizon doubled down in 2014 with its $130 billion purchase of Vodafone Group PLC's 45% stake in their Verizon Wireless joint venture. The cell phone carrier reported $0.95 EPS for the quarter, missing analysts' consensus estimates of $0.98 by $0.03.

"We're confident in executing our strategy organically, but if there's the right opportunity out there to accelerate the strategy inorganically in a way that adds holder value, we're always looking at those opportunities", said Verizon Chief Financial Officer Matt Ellis on a call with analysts. T-Mobile was also limiting the quality of streaming video unless customers paid extra but added HD video to its base $70 plan in response to Verizon's unlimited plan. During the same period in the previous year, the company posted $1.06 earnings per share.

The company's revenue and profit came in less than Wall Street was expecting.

Verizon Communications Inc (VZ.N), the No. 1 USA wireless carrier, reported a 20 percent fall in quarterly profit as it lost wireless postpaid subscribers despite the re-launch of unlimited data plans. Ruggie Capital Group now owns 2,649 shares of the cell phone carrier's stock valued at $137,000 after buying an additional 9 shares in the last quarter. It experienced a gain of 109,000 retail postpaid phone connections after the launch of unlimited data, resulting in the final toll of 289,000 lost customers.

The obvious thing to blame for Verizon's plummeting numbers is the recent wave of competition being driven by T-Mobile. Verizon's rivals are slated to report their latest results in coming weeks. Verizon brought back unlimited plans in February, hoping to attract new subscribers. But that stands to leave Verizon in a familiar position: slowing growth on the top and bottom lines, and a sliding stock price.


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