Verizon might have launched 5G, but new iPhone pulls subscribers

Verizon published Q3 results, beating market estimates on earnings and subscriber adds.

Verizon published Q3 results today, narrowly beating market expectations. On the wireless side, Verizon Wireless added 510,000 net postpaid smartphone subscribers, with the postpaid churn rate at 0.8%. The strong marketing activities following the launch of the new iPhone, including an offer of up to $750 off new models, has helped attract new subscribers. As an important operation landmark right at the end of Q3, Verizon launched fixed wireless access service on 5G in four cities, therefore could claim to be the first to offer 5G in the country.

“Verizon has posted a third quarter of strong operational and financial performance,” said CEO Hans Vestberg. “With the beginning of the 5G era in this fourth quarter, we expect that trend to continue. We are investing in networks, creating platforms to add value for customers and maintaining a focused, disciplined strategy. Verizon is best positioned to take full advantage of the opportunities offered by the new game-changing generation of technology.”

On the broadband and TV side, Verizon’s Fios gained 54,000 new internet users, slower than the 66,000 it gained the same period last year, and lost 63,000 cable TV subscribers, faster than the 18,000 it lost last year, another indication that the cord-cutting trend shows no sign of abating.

Verizon Wireless continued to make the largest financial contribution. It generated $23 billion revenue (70.5% of group total) and brought in $11 billion EBITDA (90% of group total). The wireline business’ total revenues went down by 3.7% to $7.4 billion. The consumer side of the wireline business largely held at $3.1 billion (-2.1% year on year), with the corporate business dropped by over 5%.

On the group level, the total revenues of $32.6 billion, up 2.8% from last year, beating market expectation by $110 million, with non-GAAP earnings per share of $1.22, beating expectations by $0.03. GAAP EPS of $1.19 was right in line with market expectations.

Like most telecom operators, Verizon is a mature business that does not often disappoint but seldom excites. The management guidance pointed to low-to-mid single-digit percentage of full-year consolidated revenue growth and low single-digit percentage growth in EPS, which makes us pay some attention to another area of interest, Oath, the Media & IoT business mainly comprised of AOL and Yahoo.

If Verizon was to bank on this division to herald its future growth then it might be disappointed. Total revenues went down from $2 billion a year ago to $1.8 billion. More importantly, Verizon does not expect Oath to hit the $10 billion revenue target it set for the division earlier.

Verizon’s share price gained by 1.4% in pre-market trading.

Verizon spends billions on NFL rights to give Oath a boost

US telco Verizon has announced a new deal with the NFL – i.e. American Football league – to distribute games across its digital media network.

This appears to be an attempt to answer the oft-asked question: “What’s the point of dropping billions of dollars on a couple of internet dinosaurs?” Verizon, in its infinite wisdom, has focused its diversification efforts on the acquisition of AOL and Yahoo, which were kind of a big deal 20 years ago. It decided to call the digital media formed from them Oath earlier this year and has now decided to give it an injection of premium content.

“We’re making a commitment to fans for Verizon’s family of media properties to become the mobile destination for live sports,” said Lowell McAdam, Chairman and CEO of Verizon. “The NFL is a great partner for us and we are excited to take its premier content across a massive mobile scale so viewers can enjoy live football and other original NFL content where and how they want it. We believe that partnerships like this are a win for fans, but also for partners and advertisers looking for a mobile-first experience.”

“Verizon has been a key NFL partner, both in the distribution of games on NFL mobile and as a sponsor, since 2010 and we’re thrilled to be both extending and expanding our relationship with them,” said NFL Commissioner Roger Goodell. “Our expanded partnership with Verizon is great for our fans.  Starting with the upcoming playoffs and for seasons to come, live NFL action directly on your mobile device – regardless of carrier – will give millions of fans additional ways to follow their favourite sport.”

As the quotes above touch upon, this deal marks the end of Verizon’s exclusivity, but it will now be able to offer the games to anyone via Yahoo sports and that sort of thing. They haven’t announced the numbers but reports have it between $1.5-2 billion for a five-year deal. At a time when the ROI of telco spending on premium content in coming under question this deal marks a distinct doubling down by Verizon.