Verizon maintained its momentum in the mobile market in the second quarter, with a net 603,000 retail postpaid subscribers added. However, the US operator's underlying revenues were lower, as it lost customers in fixed broadband and TV and mobile ARPU fell following the introduction of unlimited plans.
Total operating revenues rose 2.5 percent year-on-year to USD 31.7 billion, but comparable sales were down 2.3 percent after adjusting for divestments and acquisitions. Wireless revenues fell 2.4 percent to USD 21.6 billion, led by a 5.1 percent fall in service revenue to USD 15.8 billion. Wireline revenues were up 1.1 percent to USD 7.7 billion, but fell 2.7 percent on an organic basis.
The adjusted EBITDA margin improved slightly, to 36.7 percent from 36.5 percent a year ago, helped by ongoing cost reduction efforts. The company said it aims to cut costs by USD 10 billion over the next four years. Net profit was little changed year-on-year at USD 3.7 billion or USD 0.89 per share. Adjusted EPS fell to USD 0.98 from USD 1.01 a year ago.
Verizon said it expects full-year revenues "fairly consistent with 2016" on an organic basis, with improvement in wireless service revenue and equipment revenue trends. Annual adjusted EPS should follow a similar trend to revenue. Capital expenditure will be at the low end of the projected range of USD 16.8-17.5 billion, after USD 11.8 billion in the first nine months.
Mobile revenue trend still lower, but improving
Verizon said net phone additions totaled 274,000 in Q3, including 486,000 smartphones versus 242,000 a year ago. The company had a total 109.7 million retail postpaid connections and 5.6 million retail prepaid connections at the end of the quarter, up respectively 1.4 and 2.4 percent from a year ago.
Churn continued to fall, reaching 0.97 percent for retail postpaid and 0.75 percent among postpaid phone customers, but average revenue per postpaid account fell 6.0 percent year-on-year to USD 136.31. However, Verizon said the mobile service revenue trend was improving, with smaller annual declines than a year ago or Q2 and the first sequential growth in 12 quarters. Further improvement is expected in Q4, in order to exit the year with a drop of less than 4 percent in service revenue.
In the wireline market, Verizon suffered from the cord-cutting trend. Fios video subscribers were down by 18,000 in the three months to 4.648 million, and total broadband customers dropped by a net 10,000 to 6.978 million, as DSL losses offset 66,000 net additions for Fios. Total Fios revenues were still up 4.8 percent to USD 2.9 billion, leading to 1.1 percent growth in overall consumer revenues.
