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Bloomberg
Verizon Communications Inc. suffered its worst quarter of subscriber growth in more than six years amid intensified price competition from smaller rivals, adding pressure on the company’s media and advertising ventures to take up the slack for a rapidly maturing wireless business.
The nation’s largest wireless carrier signed up 442,000 total subscribers in the third quarter, falling far short of the 875,000 average of eight analysts surveyed by Bloomberg.
The results underscore a strategy by Verizon to protect profits in lieu of offering steep discounts. Third-quarter earnings excluding some items were $1.01 a share, New York-based Verizon said Thursday in a statement. Analysts predicted profit of 99 cents a share, the average of estimates compiled by Bloomberg.
With Sprint Corp. and T-Mobile US Inc. leading a price battle, Verizon is facing the challenge of holding on to big-spending customers by emphasizing service quality over price. Sprint Corp., which hired Verizon’s former “can-you-hear-me-now†pitchman for national TV ads, added 344,000 new monthly subscribers in the period.
Lucrative family-plan customers tend to be more loyal than single-line users and pay up to connect phones, tablets, Wi-Fi hot spots and even cars. T-Mobile and Sprint, the third- and fourth-largest carrier, respectively, introduced unlimited data plans to win over these families, many of which are anxious about running up big tabs watching videos on YouTube, Snapchat and Netflix. “Verizon’s unwillingness and perhaps inability to offer unlimited data plans might be impacting its ability to hold onto its customers,†Walt Piecyk, an analyst at BTIG LLC, said. Shares of Verizon fell 2.7 percent to $49 at 8:07 a.m. in early trading in New York Thursday. The stock had gained 9 percent through Wednesday’s close.
As the wireless-service industry matures, Verizon is trying to turn the business in a new direction. Using go90, its video streaming business, AOL’s web properties and the pending purchase of Yahoo! Inc., Verizon is entering a mobile video and advertising arena to challenge Google and Facebook Inc.
Verizon said in its statement that the $4.85 billion Yahoo deal should close in the fourth quarter. The company didn’t mention Yahoo’s post-deal disclosure of a 2014 hack of its subscribers, which the phone company has said could have a material effect on the deal.