The largest wireless carrier in the U.S. learned a little about basic economics during the third quarter. After raising the administrative charge for postpaid subscribers by $1.35 to $3.30 per voice line, the number of consumer postpaid phone subscribers declined by 189,000 on a year-over-year basis during the third quarter with a churn rate of .88%. The churn is the percentage of subscribers (sometimes in a specific category) that leave a carrier for another and it rose in the quarter due to the higher administrative charge.
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 with at least 150,000 net new postpaid phone subscribers in its business unit. The churn rate for the business sector’s postpaid phone business was 1.10%. Revenue for the Business Wireless group was up 5.7% on an annual basis 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 drive improved operational and financial performance, but we know there’s still more work to be done. The pricing actions we took earlier this year, as well as our new cost savings program, show that we are being deliberate and strategic in our decisions to strengthen our business. At the same time, we are focused on executing our 5G strategy, as we are covering every major market and accelerating our C-Band network build. We are on track to reach 200 million POPs within first-quarter 2023.”
Ellis also said that “The actions we have taken in the previous two quarters are gaining traction in the marketplace. 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 a 16th consecutive year, which is the longest current streak of dividend increases in the U.S. 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 gross collected during 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 during the 2021 third quarter. Diluted earnings per share declined 24.5% from $1.55 during last year’s third quarter to $1.17 in this year’s third quarter.
Verizon did have a pre-tax loss of $881 million that included adjusting pension liabilities to reflect current securities pricing and the adjustment of certain assets related to the TracFone acquisition.