By Anjali Athavaley and Aishwarya Venugopal
Verizon Communications Inc (VZ.N) on Thursday reported its first-ever quarterly loss of subscribers, even as it offered an unlimited data plan, raising fresh questions from analysts that the No. 1 U.S. wireless carrier may need to diversify its business with a larger deal.
Verizon said it lost 307,000 retail postpaid subscribers, or those who pay a monthly bill, on a net basis in the first quarter. Analysts on average were expecting net additions of 222,000, according to market research firm FactSet StreetAccount.
The company's shares fell 2.1 percent to $47.91 in morning trade.
Churn, or customer defections, among wireless retail customers who pay bills on a monthly basis, increased to 1.15 percent of total wireless subscribers, compared with the average analyst estimate of 1.03 percent, according to FactSet.
"They badly missed on every important subscriber metric, and it just underscores that the wireless business is a severely growth-challenged business at the moment," said Craig Moffett, an analyst at MoffettNathanson in an interview.
Chief Financial Officer Matthew Ellis said on a conference call with investors that churn rose in the first half of the quarter but came down in response to the relaunch of unlimited plans.
In February, Verizon announced that it would offer an unlimited data plan for the first time in more than five years.
The company has pursued revenue streams outside its core wireless business, including a $4.48 billion deal for Yahoo Inc's (YHOO.O) core business.
But industry analysts have wondered if the company will pursue a more transformative deal as its main competitor AT&T Inc (T.N) seeks to diversify its business through a planned acquisition of Time Warner Inc (TWX.N). Earlier this week, Verizon Chief Executive Lowell McAdam said in an interview with Bloomberg News that he is open to deal talks with companies ranging from Comcast Corp (CMCSA.O) to Walt Disney Co (DIS.N).
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On Thursday's conference call, Ellis clarified the comments, saying that the company would consider deals that are in the long-term interest of shareholders but is "confident with the assets we have." Net income attributable to Verizon fell to $3.45 billion, or 84 cents per share, in the first quarter ended March 31, from $4.31 billion, or $1.06 per share, a year earlier. Excluding items, earnings per share was 95 cents.
Total operating revenue fell to $29.81 billion from $32.17 billion a year earlier.
According to Thomson Reuters I/B/E/S, analysts had expected adjusted earnings per share of 99 cents and revenue of $30.77 billion.
Posted By: Tianhao Liu
Thursday, April 20th 2017 at 11:11AM
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