As pricing competition eases and unlimited data plans become routine, Verizon’s CFO has one message for investors.
“We still have runway here in terms of developing the wireless business,” Matt Ellis said during the operator’s quarterly conference call with analysts Tuesday. “I’m certainly comfortable that our wireless business will continue to grow as we go forward.”
Specifically, Ellis said that Verizon continues to sign up new customers to its smartphone plans, customers that it believes it can squeeze more money from with sales of service plans for wearables like the Apple Watch, as well as unlimited data plans with more features.
And then, Ellis said, there’s the 5G opportunity.
“As soon as devices and equipment are available, the deployment of our 5G network on the global standard will begin for mobility and residential broadband in the new 5G ultra wideband era,” he said, noting that Verizon already launched a fixed wireless 5G Home service based on Verizon’s 5GTF standard, and that the company has promised to launch a mobile 5G service using the 3GPP’s standard in the coming months.
And some analysts praised Verizon’s quarterly results and its promise of more growth in wireless to come.
“Verizon's 3Q18 results continue to showcase the wireless ‘renaissance’ the company has benefited from year to date, with strength here driving an EPS beat,” wrote the analysts at Wall Street firm Deutsche Bank Research.
Indeed, investors today sent Verizon's shares to an 18-year high.
Other analysts, however, took a long view on Verizon’s earnings and the general trend in the wireless industry.
“The real question is, will the wireless market get better? And, more to the point, will it stay better? The wireless market never quite succumbed to the worst-case scenarios put forth in 2014 and 2015. The market never trend-extrapolated to Wireless Armageddon. Today, it seems unlikely that the market will trend-extrapolate to Wireless Utopia,” wrote the analysts at MoffettNathanson. “It is now clear that the nadir for the wireless market is well behind us.”
Nonetheless, Verizon’s Ellis offered a positive outlook on the company’s operations and its wireless business during his comments Tuesday on Verizon’s quarterly conference call with investors. Here are some key topics from that event:
Subscribers: Verizon reported 515,000 retail postpaid net additions in third-quarter 2018, consisting of net phone additions of 295,000, postpaid smartphone net additions of 510,000, tablet losses of 80,000 and 300,000 other connected devices additions, primarily wearables. Those results were generally above the expectations of most Wall Street analysts.
Capex: Verizon reduced its capex for 2018. Click here for that story.
Oath: Verizon said its Oath business will not reach the 2020 revenue targets the company laid out for the operation. Click here for that story.
Churn: Verizon’s total retail postpaid churn was up slightly to 1.04%, but its in third-quarter 2018, compared with 0.97% year over year. Verizon said it expects its retail postpaid phone churn to increase during the fourth quarter.
Financials: Verizon’s total wireless revenues were $23 billion, an increase of 6.5% year over year. Companywide, Verizon said it clocked total consolidated operating revenues of $32.6 billion, up 2.8% from the same quarter a year ago. Those figures were generally above expectations.
Small cells: Verizon’s Ellis said the company was pleased that the FCC recently passed rules aimed at making it easier for carriers to deploy small cells, but he said “I don’t see it having a material impact to our build-out plans.” Added Ellis: “It’s still a very local activity.”
Public safety and FirstNet: A Wells Fargo analyst noted that the total addressable market for public safety users in the United States could be as high as 9 million active subscribers, and wondered whether Verizon was losing share in the space to AT&T and FirstNet. “We will be continuing to focus on that sector,” Ellis responded. “I think we have been very effective in defending the market share that we have … It’s really about just service execution.”