The largest wireless carrier in the U.S. learned a little about fundamental economics in the third quarter. After increasing the subscription subscription administrative fee by $1.35 to $3.30 per voice line, the number of subscribers with subscription subscriptions decreased by 189,000 year-over-year in 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 during the quarter due to the higher administrative fee.
53% of Verizon’s consumer subscribers own a 5G-capable phone
53% of Verizon’s consumer subscribers have a 5G phone
On the business side, Verizon added 197,000 net new postpaid subscribers in the three months. This allowed the company to record its fifth consecutive quarter of at least 150,000 net new subscription subscribers in its business unit. The attrition rate for the business sector subscription 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, as well as our new cost-saving programs, shows that we are conscious 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 within the first quarter of 2023.”
Ellis also said that “The actions we have taken over the previous two quarters are gaining traction in the market. We expect that we will be able to build on this momentum going forward. Our financial discipline, combined with our healthy balance sheet, allowed us to raise our dividend for the 16th year in a row, which is the longest running 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, an increase of 4% compared to gross revenue collected in the same quarter last year. Net income of $5.02 billion was down 23.3% from the $6.55 billion in 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 in the third quarter of the year.
Verizon had a pretax loss of $881 million that included the adjustment of pension liabilities to reflect current securities pricing and the adjustment of certain assets related to the TracFone acquisition.
