Verizon's Q2 Revenues Boosted by Unlimited Data Plans, XO Acquisition
Verizon, like carrier rival AT&T, is bouncing back on the wireless side, touting subscriber retention and new customers following its launch of unlimited data plans during the first quarter of the year.
"As expected, the introduction of the unlimited pricing plan increased the LTE network usage as our customers enjoy the experience of consuming more data throughout the day on the industry-leading wireless network," Matt Ellis, Verizon's executive vice president and CFO said during the company's earnings call on Thursday.
Ellis told analysts that Verizon grew its postpaid account base for the first time in the last six quarters.
Verizon added 633,000 wireless customers in Q2 2017, a 1.2 percent bump up from 585,000 in the year ago quarter, proving that its unlimited data plans are paying off. The carrier's retail postpaid churn rate was 0.94 percent during the quarter, lower than Wall Street's expectation of 1.08 percent.
Following suit with wireless rivals Sprint and T-Mobile, Verizon began offering unlimited data plans during Q1 2017. The second quarter marks the first full three-month period that Verizon offered unlimited plans.
Despite subscriber wins in Q2 however, total wireless revenue slumped by 1.9 percent to $21.28 billion compared to $21.70 billion in the year-ago quarter. The carrier attributed the decline to lost overage revenue but said it is mitigating the lost revenue as some customers create new accounts or move to unlimited plans.
The Basking Ridge, N.J.-based carrier touted its recent third-party network performance survey standings during its earnings call, including its freshly-crowned 4G network leadership position by J.D. Power. Verizon also highlighted its completed Yahoo acquisition, which will help the carrier scale our media business, as well as its winning bid for Straight Path Communications for $3.1 billion, which Verizon expects to close during Q1 2018.
"Our spectrum portfolio positions us to lead and further drive 5G technology and its ecosystem," Ellis said of the Straight Path win.
Verizon's wireline division, which includes its Enterprise Solutions, Partner Solutions, Business Markets segments, and its recently-acquired XO Communications operations, climbed 1.2 percent to $7.80 billion in Q2 2017, compared to $7.71 billion a year ago.
"This shift in the wireline revenue trend towards fiber is growing," Ellis said, noting that revenues for fiber-based products grew more than 3 percent during the quarter. "[This] supports our plans to further invest in fiber and our emphasis on delivering value to all business customers, from the very small to the large enterprise," he said.
Revenues for Verizon's newly-formed Business Markets division jumped up 9 percent during the quarter, climbing to $921 million during Q2 2017 from $845 million in Q2 2016.
Partner Solutions revenue declined a modest 0.4 percent to $1.23 billion, down from $1.24 billion in Q2 2016. Enterprise Solutions revenue, however, experienced a 0.4 percent bump to $2.39 billion compared to $2.38 billion in the year-ago period.
However, overall wireline revenue numbers got a boost from Verizon’s newly acquired XO Communications during the quarter, Ellis said, noting that on an organic basis, wireline segment revenue decreased 2.8 percent overall, with Partner Solutions revenue declining 6.8 percent and Enterprise solutions falling 4.1 percent if not for the acquisition.
Verizon's Telematics revenues, on the other hand, climbed 20 percent year over year to $220 million in second-quarter 2017.
For Q2 2017 which ended June 30, Verizon's revenue rose a modest to $30.55 billion from $30.53 billion, beating Wall Street's expectations of $29.91 billion for the quarter.
Net income attributable to Verizon jumped up to $4.36 billion or adjusted earnings per share of $0.96 during the quarter, compared to $0.94 in the year-ago period. Verizon attributed the 55.9 percent increase during Q2 to the sale of its data center assets to Equinix.