Verizon bounced back in the mobile market in Q2, recovering from customers losses in the first quarter, after the launch of its own unlimited offer to match challenger T-Mobile. The company added a net 614,000 retail postpaid subscribers in the quarter, in line with the year-earlier period, as well as 19,000 new prepaid users, for a total retail base of 114.536 million at the end of June.
Mobile service revenue was still down 6.7 percent year-on-year to USD 15.62 billion, hurt by the price pressure and heavy promotional activity in the market. After a rise in operating costs as well, the mobile EBITDA margin dropped to 45.8 percent from 47.5 percent a year ago.
Postpaid churn reduced to 0.94 percent in the quarter from 1.15 percent in Q1. The figure was unchanged year-on-year, despite increased churn in tablets, Verizon said. Net phone additions of 358,000 included 590,000 smartphones in the quarter, well ahead of the results in Q2 2016.Verizon said around 75 percent of postpaid customers are now on unsubsidized service pricing. As customer growth and the migration to unlimited plans offsets the loss of overage fees, Verizon expects its service-revenue trend has flattened and should improve in the second half.
At the wireline division, revenues were up 1.2 percent year-on-year to USD 7.802 billion. Excluding the acquisition of XO and sale of its data centres, revenues fell 2.8 percent. The division's EBITDA margin improved to 20.8 percent compared to 13.3 percent a year ago when the operator's was hit by a strike.
In terms of customers, the fixed broadband base fell by a net 23,000 in Q2, as the loss of 72,000 DSL customers more than offset the improvement in Fios net adds to 49,000. Video subscribers fell for a second quarter, down by 15,000 from March, and voice connections continued their steady decline, with 282,000 disconnections.
At the group level, Verizon grew net earnings to USD 1.07 per share from USD 0.17 a year ago, as the gain on the sale of the data centres offset various acquisition-related charges. Excluding the one-time items, adjusted EPS rose to 96 cents from 94 cents. Revenues adjusted for the divestments and acquisitions fell 2 percent, to USD 30.5 billion.
Capex was little changed year-on-year at USD 7.0 billion, and operating cash flow totaled USD 9.9 billion, including USD 2.1 billion in pension contributions. Verizon said it's started pre-commercial 5G fixed wireless trials in eight of the 11 previously announced cities.
