Verizon Communications stock rose as the telecommunications company turned in higher earnings than anticipated, reporting an increase in wireless subscribers despite expectations of another decline.
Verizon
(ticker: VZ) reported adjusted second-quarter earnings of $1.21 a share from revenue of $32.60 billion. For the same period a year earlier, Verizon reported earnings of $1.31 a share from revenue of $33.79 billion.
Verizon was expected to report second-quarter earnings of $1.17 a share on revenue of $33.30 billion, according to a FactSet survey of analysts’ estimates.
“The steps that we have taken to improve our operational performance are working, and we are confident that we will achieve our financial targets for the full year,” CEO Hans Vestberg said in a statement.
Verizon shares were up 2.4% in premarket trading.
A key positive for Verizon was that it managed to eke out a gain in its wireless subscriber base after a recent shake-up of its wireless plans. The company reported a net gain of 8,000 postpaid phones in the second quarter.
The rise defied analysts’ expectations for a net loss of around 9,600 such users. Verizon had a net loss of 127,000 postpaid phone users in its first quarter.
Verizon has reduced its number of unlimited mobile plans from six to two, while offering subscriptions to other services as add-ons rather than as bundled options. The change is intended to reduce confusion for customers by simplifying the range of plans available.
Verizon still reported a net loss of 136,000 wireless retail postpaid phone customers in its consumer business for the second quarter. The overall gain was due to the addition of a net 144,000 postpaid phones in the business segment.
“While Verizon has slowed churn, it continues to face challenges in consumer wireless. We’ve heard from our experts that aggressive pricing from
T-Mobile
and
AT&T
combined with effective messaging around network quality have been eating into Verizon’s customer base,” wrote Third Bridge analyst Jamie Lumley in a research note on Tuesday.
Verizon continues to expect total wireless service revenue growth of 2.5% to 4.5% for the full year. It stuck with a forecast that it will achieve $4.55 to $4.85 in annual adjusted earnings per share.
Beyond earnings, there will be attention on the company’s earnings call for any update about Verizon’s exposure to risks linked to lead-sheathed copper telecom cables.
The Wall Street Journal reported in early July that thousands of miles of copper cables wrapped in lead were still in service throughout America, with high levels of lead contamination in the immediate environment. That has raised concerns that Verizon and other telecoms, who own the copper networks, could be forced to pay for removal of the cables and face potential lawsuits over the related environmental and health risks.
Verizon stock fell after the Journal reports were published, although Wall Street analysts have generally concluded the drop was overdone compared with the potential costs it faces.
Verizon has previously said it has about 540,000 miles of copper in its network and that a small percentage is sheathed in lead. The company has told Barron’s it is testing the various sites mentioned in the Journal articles and takes concerns around lead-sheathed cables very seriously.
Write to Adam Clark at [email protected]
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