Verizon tops analysts’ first-quarter profit estimates

NEW YORK – Verizon Communications Inc., the largest U.S. wireless carrier, exceeded analysts’ first-quarter profit estimates even as the company was forced to give away tablets to counter the popularity of smaller rival T-Mobile US Inc.

Earnings were $1.02 a share, the New York-based company said in a statement. That compares with the 95-cent average of estimates compiled by Bloomberg. Sales rose to $32 billion, while analysts had projected $32.3 billion.

While phone discounts and tablet promotions helped Verizon lure 565,000 new monthly subscribers, the number missed the 587,000 average estimate of analysts surveyed by Bloomberg. The fight to keep customers amid price battles with competitors like T-Mobile continues a challenging industry trend. Verizon’s wireless service margins were 44.8 percent, below analysts’ projections for 48.6 percent. The average monthly phone bill was $156.14, less than the $159.15 average estimate.

“This is surprisingly positive given that they have been pulling forward their spending earlier in the year to retain customers. This is a good sign for the remainder of the year.” said Kevin Roe, an analyst with Roe Equity Research in Dorset, Vt.

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Verizon shares rose 0.2 percent to $49.49 in early trading in New York. While the stock dropped 4.8 percent last year, it has gained 5.6 percent this year through Monday.

Battle for customers

AT&T Inc., which posts earnings on Wednesday, added 400,000 new monthly subscribers in the first quarter, based on the Bloomberg survey. T-Mobile, whose quarterly report is expected in May, probably added 930,000.

On Feb. 5, Verizon announced $15.6 billion in deals to sell assets. Frontier Communications Corp. agreed to pay more than $10 billion for Verizon landline operations in three states. American Tower Corp. is paying $5 billion for rights to 11,324 Verizon wireless towers. Proceeds from the sales will help Verizon pay for the $10.4 billion purchase of airwaves at a U.S. auction in January.

For the first quarter, Verizon reported net income of $4.34 billion, or $1.02 a share, down from $6 billion, or $1.15, a year earlier.

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