Verizon on Wednesday reported third quarter results, including 283,000 net postpaid phone additions as wireless service revenues ticked up slightly.
All of Verizon company-owned retail stores were reopened with normal hours by early September, compared to more than 60% open at the end of Q2 following some temporary closures due to COVID-19.
Stores are back with new measures in place like appointment scheduling, curbside pickup, and touchless retail, and consumer foot traffic hasn’t reached pre-Covid levels yet, CFO Matthew Ellis said during Verizon’s Q3 earnings call.
Still, in the face of an uncertain operating environment, wireless service revenue in consumer and business segments is recovering faster than initially anticipated, he said, and Verizon expects total wireless service revenues to grow by at least 2% in the fourth quarter versus the prior year.
Verizon revised its earnings forecast upward to between 0% to 2% Adjusted EPS growth for the full year, compared to the earlier guidance of -2% to 2%.
Consumers made up 142,000 of Verizon’s net postpaid phone additions in Q3, while business accounted for 141,000.
Verizon added 77,000 net prepaid accounts in the third quarter, marking its best quarter in the segment in years. That compares to adding 12,000 in Q2, after losing prepaid subscribers for five quarters in a row, including 81,000 prepaid losses in Q3 2019.
Overall, Verizon had about 120.3 million wireless connections, across consumer postpaid and prepaid, and business. Of those only around 4 million are prepaid subscribers.
Verizon historically has been focused on postpaid subscribers, but is poised to have the largest prepaid base after announcing plans to acquire TracFone. TracFone is the largest seller of wireless prepaid service, and after closing would give Verizon around 21 million new prepaid subscribers.
RELATED: Verizon swoops into prepaid with $6.9B Tracfone acquisition
Total wireless service revenue increased 0.3% year over year to $16.4 billion. However, just on the consumer group side, total revenues (which also includes Fios) were down 4.3% year over year to $21.7 billion, which the carrier attributed to a more than 20% drop in wireless equipment revenue and less customer activity.
Wireless service revenue for Verizon’s consumer group was $13.4 billion, down 0.7% from Q3 2019, while the business group saw a 4.9% increase in wireless service revenues to around $3 billion.
Although Verizon was featured prominently when Apple unveiled its latest iPhone, the first with support for 5G, the launch had been delayed – at a time when consumers have already been waiting longer to upgrade their handsets. Verizon’s consumer equipment revenue plummeted 20.1% year over year in Q3 to $3.4 billion.
However, Ellis said more customers are subscribing to unlimited plans and stepping up to higher-value tiers, with around 60% of Verizon’s customer accounts on unlimited plans and about one quarter of those on premium tiers. Consumer postpaid phone churn was 0.63%
The carrier pointed to lower customer activity and “the timing of certain device launches” as the cause of a 4.1% drop in total consolidated revenues, which were $31.5 billion in Q3.
Other Q3 metrics:
- Total wireless postpaid churn was 0.89%, while postpaid phone churn was 0.69%
- Verizon’s achieved $8.3 billion cumulative cash savings on its goal to reach $10 billion by the end of 2021
- Capital expenditures through the third quarter were $14.2 billion
- Adjusted earnings per share of $1.25, including about negative 5 cents of COVID-19 related impacts
- Consolidated adjusted EBITDA of $11.9 billion
- 1.2 million accounts on payment plans related to the Keep America Connected pledge that lets customers pay their balance over six months, with 90% having made a payment