Verizon earnings beat estimates as cheaper plans attract customers
By Neha Malara and Sheila Dang
(Reuters) - Verizon Communications Inc (NYSE: VZ) beat Wall Street estimates for third-quarter profit and revenue on Friday, as the largest U.S. wireless carrier cut prices of its unlimited plans to pull in more subscribers who pay monthly bills.
The results underscore the company's focus on strengthening its core wireless business in a highly competitive U.S. market by also adding free streaming content to its unlimited plans.
Verizon said earlier this week that it would offer a free one-year subscription to Walt Disney Co's (NYSE: DIS) soon-to-be-launched Disney+ streaming service, taking aim at rival AT&T Inc (NYSE: T) that is set to launch streaming service HBO Max later this month.
"We added Apple Music and will now have Disney+. As we make it easier for people to step up into unlimited, that brings value for us as well," Verizon Chief Financial Officer Matt Ellis told Reuters.
Verizon introduced four new pricing plans for its unlimited packages in the third quarter, starting at $35, and expanded its 5G services to four new cities, taking the total to 15.
That helped add 615,000 postpaid customers in the latest quarter, well above analysts' estimates of 527,000, according to research firm FactSet.
Postpaid subscribers, or those who pay monthly bills, are valuable to telecom companies as they provide a steady stream of revenue and tend to stick longer than prepaid users.
Vijay Jayant at Evercore ISI said while price cuts helped the company add subscribers, the cost per upgrade was likely higher, given the launch of Apple Inc's (NASDAQ: AAPL) iPhone this year.
Meanwhile, revenue in Verizon's media unit slipped 2% to $1.8 billion from a year earlier.
Verizon recently sold social media platform Tumblr as part of its efforts to revamp the unit, Verizon Media, which also houses Yahoo, HuffPost and TechCrunch.
Net income rose to $5.34 billion, or $1.25 per share, in the three months ended Sept. 30 from $5.06 billion, or $1.19 per share, a year earlier.
Excluding items, Verizon earned $1.25 per share, edging past analysts' average estimate of $1.24, according to IBES data from Refinitiv.
Total operating revenue rose nearly 1% to $32.89 billion, beating the estimate of $32.75 billion.
The company's shares were marginally higher in morning trade.
(Reporting by Neha Malara and Sheila Dang; Editing by Anil D'Silva and Sriraj Kalluvila)