Verizon posts higher subscriber loss on price hikes, competition
Verizon Communications lost more
wireless subscribers
in the first quarter than Wall Street expected, as the U.S. telecom giant grappled with the fallout of recent price hikes and aggressive promotions from rivals.
Shares of the company were down about 3 per cent in early trading.
The company warned in March off-season promotions by AT&T and T-Mobile would result in "soft" subscriber growth, fueling fears about intensifying competition in an industry vying for a limited pool of new subscribers.
"We had a pretty big price up in January, and the elasticity on that price up was higher than what we had anticipated," Sowmyanarayan Sampath, CEO of Verizon Consumer, told Reuters.
That led to a higher churn, percentage of customers exiting a service, with Verizon reporting a loss of 289,000 monthly bill-paying wireless subscribers in the first quarter, compared with expectations for 166,400 losses, according to FactSet data. Verizon saw reductions in business wireless accounts due to the "new government and their efficiency work", CEO Hans Vestberg said in a post-earnings call.
Only a small portion of Verizon's annual $18 billion capital expenditure is exposed to tariffs, mainly on imported wireless equipment, Vestberg said.
The company introduced a three-year price guarantee in early April to lock in customers for its myPlan and myHome offerings.
"March was very strong, especially the last two weeks and in April, we were running almost double-digit growth," Sampath said.
It also reaffirmed its annual adjusted profit and free cash flow outlook, a sign it was confident in its business plans amid economic uncertainty.
In the first quarter, total revenue grew 1.5 per cent to $33.5 billion, edging past analysts' estimates of $33.24 billion, according to data compiled by LSEG.
Wireless service revenue
grew 2.7 per cent to $20.8 billion, helped by the price hikes implemented by the company.
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