Verizon Communications Reports Mixed Quarterly Results Amid Slow Phone Upgrades
- Verizon reported lower-than-expected revenue for the quarter, largely due to slow phone upgrades in the U.S.
- Despite this, the telecommunications giant is experiencing strong growth in its wireless subscriber base.
- The company's ability to innovate and encourage phone upgrades may be critical to reversing the downturn in revenue.
Verizon Communications has reported second-quarter revenue of $32.8 billion, falling short of analysts' expectations of $33.06 billion. The telecom giant's shares dropped 3.4% in pre-market trading following the announcement, as the company grapples with a significant slowdown in phone upgrades among U.S. consumers. Price-sensitive customers are opting to retain their existing devices longer, impacting the upgrade rates that are crucial for telecom firms offering promotional plans. Despite the revenue miss, Verizon experienced growth in its wireless subscriber base, adding 148,000 net monthly bill-paying subscribers from April to June, surpassing the average estimate of 127,870. This marks a recovery from the previous quarter, where the company lost 68,000 subscribers. Analysts suggest that the upcoming release of new iPhones featuring artificial intelligence could stimulate upgrades and bolster the smartphone market in the latter half of the year. Verizon's myPlan, introduced in May 2022, has enhanced its competitive edge against rivals AT&T and T-Mobile US by allowing customers to tailor their plans to their needs. Additionally, the company has formed partnerships with streaming services like Netflix and Disney to offer promotional bundles, further attracting customers. In a strategic move, Verizon raised prices on some older plans in March to encourage users to transition to newer offerings. The company's consumer segment reported a net loss of 8,000 wireless retail postpaid subscribers, a significant improvement from the 136,000 losses recorded a year earlier. Excluding certain items, Verizon's earnings per share stood at $1.15, aligning with market expectations.