The largest wireless carrier in the US learned a bit about financial fundamentals during the third quarter. After raising the administration fee for postpaid subscribers by $1.35 to $3.30 per voice line, the number of postpaid consumer subscribers fell by 189,000 year over year during the third quarter with a churn rate of 0.88%. Churn is the percentage of subscribers (sometimes in a specific category) who leave one operator for another, and it increased in the quarter due to the higher administrative cost.
53% of Verizon’s consumer subscribers own a 5G-capable handset
53% of Verizon’s consumer subscribers have a 5G phone
On the business side, Verizon added 197,000 net new postpaid phone subscribers during the three months. This allowed it to record its fifth consecutive quarter of at least 150,000 net new postpaid phone subscribers in the business unit. The attrition rate for the business community’s postpaid telephone business was 1.10%. Revenue for the Business Wireless group increased 5.7% year over year to $3.3 billion. The increase is due to higher pricing and growth in the customer base.
Verizon Chairman and CEO Hans Vestberg said, “We took a number of actions in the third quarter that helped improve operational and financial results, but we know there is still more work to do. The pricing actions we took earlier this year, also like our new cost savings program, shows that we are deliberate and strategic in our decisions to strengthen our business. At the same time, we are focused on executing our 5G strategy, as we cover all major markets and accelerate our C-Band network construction. We are on track to reach 200 million POPs by the first quarter of 2023.”
Ellis also said that “The actions we have taken in the previous two quarters are having an impact in the market. We expect that we will be able to build on this momentum into the future. Our financial discipline, combined with our healthy balance sheet, enabled us to increase our dividend for the 16th consecutive year, which is the longest streak of dividend increases in the US telecom industry.
Verizon shares hit their lowest price in over a decade
Overall, Verizon reported third-quarter revenue of $34.2 billion, up 4% over the same quarter last year. Net income of $5.02 billion was down 23.3% from the $6.55 billion net income it reported in the third quarter of 2021. Diluted earnings per share fell 24.5% from $1.55 in last year’s third quarter to 1, 17 dollars in the third quarter of the year.
Verizon had a pretax loss of $881 million that included an adjustment to pension liabilities to reflect current securities pricing and an adjustment to certain assets related to the TracFone acquisition.