Verizon’s shares hit 10-year low on Friday following release of Q3 results

The largest wireless carrier in the US learned a bit about basic economics during the third quarter. After increasing the administrative charge for postpaid subscribers by $1.35 to $3.30 per voice line, the number of postpaid phone subscribers decreased by 189,000 year-over-year during the third quarter with a churn rate of 0 .88%. Churn is the percentage of subscribers (sometimes in a specific category) leaving one operator for another, and it increased in the quarter due to the higher admin fee.

53% of Verizon consumer subscribers own a 5G-enabled phone

In the consumer sector, nearly 53% of Verizon’s postpaid wireless phone subscribers owned a 5G-enabled phone during the third quarter. While the carrier has had to deal with higher infrastructure costs due to the seemingly endless rollout of 5G, prices need to be closely monitored thanks to stiff competition between Verizon, T-Mobile and AT&T. And later this year, Boost hopes to launch its Infinite service that provide 5G service in the US at a lower price than the Big Three.

On the business side, Verizon added 197,000 net new postpaid phone subscribers during the three months. This allowed it to register its fifth consecutive quarter with at least 150,000 net new postpaid telephony subscribers in its business unit. The churn of the business sector postpaid telephony business was 1.10%. Business Wireless group revenue increased 5.7% annually to $3.3 billion. The increase is due to higher prices and the growth of the customer base.

Combining consumer and business units, the number of net new postpaid phone subscribers during the quarter totaled 8,000. That was well below Wall Street estimates that called for Verizon will add a total of 35,000 net new postpaid phone subscribers during the quarter.

Verizon Chairman and CEO Hans Vestberg said, “We took a number of steps in the third quarter that helped drive better operating and financial performance, but we know there is still work to be done. The pricing steps we took at earlier this year as well as our new cost savings program, show that we are being deliberate and strategic in our decisions to strengthen our business At the same time, we are focused on executing our 5G strategy as we are covering all major markets and accelerating our C-band network build. We’re on track to hit 200 million POPs in Q1 2023.”

Meanwhile, Verizon CFO Matt Ellis blamed higher plan prices for consumer-side disconnections, saying “the pressure” would continue into the fourth quarter. Wall Street analysts chimed in with his comments. “What people forget is that the largest company in the industry has the most customers to lose each quarter,” said Michael Hodel, director of telecommunications and media research at Morningstar.

Ellis also said that “the actions we have taken in the past two quarters are gaining traction in the market. We look forward to building on this momentum going forward. Our financial discipline, combined with our healthy balance sheet, allowed us to increase our dividend for the 16th year in a row.” , which is the longest current streak of dividend increases in the US telecommunications industry.

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Verizon shares hit their lowest price in more than a decade

Overall, Verizon reported third-quarter revenue of $34.2 billion, 4% higher than gross revenue collected during the same quarter last year. Net income of $5.02 billion decreased 23.3% from the $6.55 billion of net income it reported during the third quarter of 2021. Diluted earnings per share decreased 24.5%, from $1.55 during the third quarter of last year to $1.17 in the third quarter of this year.

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Verizon had a pretax loss of $881 million that included the adjustment of pension liabilities to reflect current security prices and the adjustment of certain assets related to the TracFone acquisition.

Investors, meanwhile, pushed Verizon shares down $1.65 or 4.5% on Friday to $35.35. The day’s low of $34.55 was the lowest share price in more than ten years. The 52-week high is $55.51 (which seems a long way off) and the 52-week low is the nadir of $34.55 reached on Friday.

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