NEW YORK – Verizon Communications Inc. exceeded Wall Street estimates for third-quarter profit and subscriber growth, boosting investor confidence as the company expands its costly launch of next-generation 5G wireless services.
- Total wireless subscribers rose by 601,000, which includes new phones, hot spots, smartwatches and other connected devices. Earnings, excluding special items, were $1.25 a share. Analysts expected 536,000 new wireless subscribers and earnings of $1.24 a share. Revenue of $32.9 billion was just ahead of estimates.
- Profit for the quarter was $5.3 billion, a 5.4% increase year over year.
- Revenue for the quarter was $32.9 billion, a 0.9% increase year over year.
Key insights
- Verizon added 444,000 lucrative monthly mobile-phone customers, more than the 359,000 estimate by Cowen & Co. analyst Colby Synesael. To boost that number, the company turned to phone discounts to help lure new customers, a move usually more common during the holiday season.
- Verizon took the early lead in 5G network technology, and now offers the mobile service in parts of 13 cities and wireless broadband to homes in five cities. Verizon is racing against rivals T-Mobile US Inc. and AT&T Inc., which are planning to have nationwide 5G service in the coming months.
- CEO Hans Vestberg, who took the helm a year ago after working most of his career at network-equipment maker Ericsson AB, has shrunk investments in areas like media and advertising to focus more on network expansion, particularly toward 5G technology.
- On Tuesday, Verizon announced it would give wireless customers a year of free Disney+ when the streaming video service starts next month. Free-streaming promotions, like T-Mobile’s Netflix offer, have helped attract subscribers to wireless carriers and their media partners.
Market reaction
- The shares were up 0.7% to $61.01 in U.S. premarket trading Friday. Verizon was up 7.8% this year through Thursday, lagging behind gains of around 29% by AT&T, which is under pressure from activist investor Elliott Management Corp. to bring higher returns to shareholders.
Scott Moritz is a reporter for Bloomberg News.
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