Verizon Q3 solid, adds 603000 net retail postpaid customers

Verizon reported net income of 89 cents in the quarter, flat with the year-earlier period but matching the consensus estimate of analysts.

Verizon is focused on driving profitability through efficiencies across its business and in September announced it has targeted $10 billion in cumulative cash savings over the next four years. Churn was 0.97 percent in the third quarter. Total Fios revenues were still up 4.8 percent to United States dollars 2.9 billion, leading to 1.1 percent growth in overall consumer revenues. But it now expects capital spending for 2017 to be at the lower end of the prior range. "On a comparable basis excluding divestitures and acquisitions ... consolidated revenues declined 2.3%", admitted Verizon.

Revenue from the wireless business, Verizon's largest, fell 2.4% to $21.58 billion, as the switch to unlimited plans continued to weigh on service revenue. Wireless EBITDA was almost $10 billion with EBITDA margin of 46.2 percent, compared with 44.9 percent in Q3 2016. But later product releases from Apple and Google might move more upgrades into the fourth quarter, executives said on the conference call. Sequentially, service revenues increased for the first time in 12 quarters.

Verizon said it expects full-year revenues "fairly consistent with 2016" on an organic basis, with improvement in wireless service revenue and equipment revenue trends. The retail postpaid churn rate was 0.7%, while the retail postpaid phone churn was at 0.75%.

The percentage of phone activations on device payment plans was about 77 percent in Q3 in line with Q2. Lederer & Associates Investment Counsel CA increased its stake in Verizon Communications by 4.0% in the first quarter. Approximately 49 percent of postpaid phone customers had a device payment plan.

The company added 603,000 retail postpaid connections, of which 486,000 were smartphones. Of the 603,000 postpaid net additions, 91,000 were tablets and wearables accounted for 238,000. At the end of the quarter, Verizon had 5.8 million Fios Internet connections and 4.6 million Fios Video connections. The company had 115.3 million total wireless retail connections, up from 113.7 million the same quarter past year and 114.5 million in the second quarter. Meanwhile, Fios total revenue growth was 4.8%.

The lack of an online video service is hitting Verizon's home entertainment business.

"We attribute the Verizon wireless strength to both their network advantage and the competitive landscape being leveled with everyone selling unlimited data", Kevin Roe, an analyst with Roe Equity Research, said in an email. Verizon lost 18,000 FiOS video subscribers in the third quarter, that's more than the 17,000 analysts predicted. Just over 50 percent of Verizon's available low- and mid-band spectrum portfolio is being used for 4G LTE.

The company said that the earnings reflect a one-cent-per-share impact as a result of the natural disasters in Florida and Texas, and said the comany also offered services in northern California and Puerto Rico.

The Verizon Intelligent Edge Network, the company's future network architecture created to meet the demands of new types of applications, has many components that lead to a multi-use, software-driven network at scale.

Verizon Communications (NYSE:VZ) last issued its quarterly earnings results on Thursday, July 27th.