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Verizon loses 36,000 postpaid phone subs in Q1 2022

Verizon reported a postpaid phone net loss of 36,000 for the first quarter of 2022, which represents a big improvement from a year ago. However, it was a lot worse than the fourth quarter – a traditionally great time for wireless carriers – when it added 558,000 phone customers.

Rival AT&T on Thursday reported 691,000 postpaid phone net adds for its first quarter 2022. Wall Street analysts, on average, are predicting that T-Mobile will report 550,000 net adds when it delivers quarterly results on April 27.

Verizon’s total wireless service revenue growth was 9.5%, reflecting the first full quarter of TracFone ownership. Service and other revenue was down 2.5%, as the revenues lost from Verizon Media Group more than offset incremental revenue from TracFone. But it’s the fixed wireless access (FWA) subscribers that a lot of analysts were looking for, and Verizon delivered on that score, reporting 194,000 fixed wireless net additions. Analysts had been expecting at least 150,000 for the quarter.

The consumer segment had Q1 fixed wireless net additions of 112,000, with sales boosted by Verizon’s launch of C-band spectrum and its “5G Ultra” campaign. Verizon Business reported 82,000 fixed wireless net additions for the quarter.

Earlier this week, T-Mobile announced that it welcomed its 1 millionth Home Internet customer in early April, implying the operator added more than 350,000 fixed wireless subscribers in 2022, according to New Street Research analysts. T-Mobile ended 2021 with 646,000 fixed wireless subscribers.

C-band update

Verizon now has more than 35,000 millimeter wave (mmWave) sites on air and about 130 million PoPs covered with C-band at the end of the first quarter, Verizon Chairman and CEO Hans Vestberg said during Friday’s earnings conference call.

Traffic on 5G Ultra Wideband (UWB), which is a combination of the mmWave and mid-band (C-band) spectrum, is increasing rapidly, he said. Verizon saw a 35% increase in mmWave traffic between the fourth quarter of 2021 and the first quarter of 2022.

C-band traffic also grew dramatically from the end of February to the end of March. Where C-band is deployed, 30% of the traffic uses that spectrum, Vestberg said.

“Progress is being made throughout our network,” he said. In March, it announced it had secured early clearing with two satellite companies for an additional 100 MHz of C-band spectrum in 30 additional markets. Adding this spectrum will expand its footprint by 40 million additional potential customers; it expects to reach at least 175 million PoPs by the end of 2022 on C-band, he said.

That deployment puts Verizon a full year ahead of schedule on its C-band deployment, said CFO Matt Ellis. It also expects to use C-band to cover at least 50 million households with FWA by the end of 2025, he reiterated.

During prepared remarks, Vestberg said 5G adoption is already much faster than what happened with the switch from 3G to 4G.

A year after 4G launched, less than 10% of the users had 4G phones. A year after the launch of 5G dynamic spectrum sharing (DSS), about 24% of Verizon customers were on 5G devices.

Now, 5G device penetration is significant, and it’s expected to reach 60% of its wireless consumers by the end of 2023, up from 40% at the end of the first quarter, he said.

Inflation = higher prices?

Asked about inflation, Vestberg said Verizon hasn’t seen a big impact yet. “We are planning for all scenarios,” and that includes looking at what they can do with pricing, he said, without going into specifics.

“We don’t know how this will impact us,” but clearly these are levels of inflation that haven’t been seen before in the wireless industry, he said. “We’re going to see what’s going to happen, but clearly we are in a moment in the economy where we really don’t know how deep it’s going to impact.”

Ellis said there’s been “a bit of a downtick” in overall foot traffic, not just in its stores but more broadly. Yet “our share continues to be where we’d expect it to be,” and churn continues to be strong, he said.

Verizon’s total wireless service revenue was $18.3 billion, a 9.5% increase year over year. Total retail postpaid churn was 1.04% and retail postpaid phone churn was 0.83%. Total wireless activations were up 11% year over year.

While Verizon said it expects prepaid ARPU to stabilize and grow sequentially as it brings the TracFone brands fully under its wing, prepaid ARPU in the quarter was $30.89 across all of the consumer prepaid brands, which was down over the first quarter of 2021.

The migration of TracFone subscribers from other networks continues, Vestberg said. The majority of TracFone subscribers were using the Verizon network before the acquisition, which closed in November, and the remainder are being moved over.

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