Verizon is feeling the heat from the competition. The nation largest wireless carrier reported a drop in the first quarter and warned that earnings growth would be at the low end of its previous forecast.
Verizon lost 292,000 consumer postpaid phone subscriptions, an industry metric used to measure success. Verizon attributed the loss to "competitive dynamics" in a press release on its earnings for the quarter issued on Friday. AT&T reported first-quarter subscriber growth on Thursday.
Verizon losses were largely offset by 256,000 net business postpaid phone additions, but the carrier is still concerned about consumer losses, which occurred primarily in March, when the first quarter ended, and into April, implying a further slowdown in the second quarter.
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"We will continue to take appropriate measures to remain competitive in the market," Verizon Executive Vice President and Chief Financial Officer Matt Ellis said during the earnings call, though he didn't provide specifics beyond remarks about relying on the carrier network and flexible plans.
Nonetheless, overall wireless services revenue was up 11.2 percent year on year, thanks in part to existing customers upgrading to more expensive plans, as well as revenue from prepaid mobile company Tracfone, which appeared on Verizon books for the first time after the carrier completed its acquisition of the company last November. Verizon reported a loss of 80,000 Tracfone net phone subscriptions during the third quarter, which it attributed to the expiration of generous pandemic mobile service subsidies that benefited the prepaid company customer base.
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Verizon focus on wireless and broadband internet may take some time to attract new customers and offset losses, especially as the company spends this year expanding coverage of its 5G C-band range, which launched in January. With higher speeds and wider coverage of its 5G Ultra Wideband network, the carrier is betting big on C-band radio frequencies as a customer enticement. However, this quarter losses indicate that customers aren't yet convinced.
After reaching 100 million people with C-band 5G coverage in January, Verizon has continued to activate more service and is on track to reach 175 million by the end of 2022. At Verizon investor day in March, the carrier announced that it had reached agreements with satellite companies to gain access to more C-band spectrum, which will allow it to cover 40 million people in certain markets a year earlier than expected.
Verizon has continued to encourage existing customers to upgrade their phones, and 40% of customers now have 5G handsets. This is only slightly higher than the 33% reported in January. Numbers will gradually increase over the next year, with the carrier anticipating that six out of ten customers will be using 5G phones by the end of 2023.
Verizon Fios fixed broadband added 55,000 subscribers, while Verizon 5G Home fixed wireless access continues to grow, with 112,000 net new customers. The carrier attributed this to the increased availability of 5G Home as a result of the ongoing rollout of C-band service. According to current plans, the service will be available to 50 million households and 14 million businesses by the end of 2025.
Verizon revenue in the first quarter was $33.6 billion, up 2.1 percent from the same period last year. Wireless revenue increased to $15.2 billion with Tracfone in its portfolio, up from $13.7 billion in the first quarter of 2021. This is offset in part by the loss of revenue from Verizon Media Group, which was sold last year and reduced service and other revenue by 2.5 percent.
The carrier earned $4.7 billion in net income, or $1.09 per share. Its adjusted earnings per share were $1.35, in line with analyst expectations, but down slightly from $1.36 a share a year ago, according to Yahoo Finance.
In recent trading, Verizon shares fell 6.2 percent to $51.60.