An increase in the popularity of unsubsidised price plans reduced Verizon’s Q4 revenue for its wireless division despite an increase in customer numbers.
Speaking on the company’s investor conference call, Verizon EVP and CFO Matt Ellis said while customer numbers grew during the quarter, the competitive landscape and customers moving away from handset-inclusive deals reduced its bottom line.
Ellis told investors the evolution in plans is taking place “ahead of target” and is expected to continue into 2017. He added the company would be launching further offers to attract new customers in what he described several times as a “challenging and competitive market”.
Net additions in fell from 1.36 million in Q4 2015 to 582,000 in Q4 2016, as a decline in pre-pay customers offset growth in postpaid subscribers in the recent period. The operator ended Q4 2016 with 108.8 million postpaid connections, and a total of 114.2 million users – a 1.9 percent year-on-year increase.
Wireless revenue in Q4 2016 fell 1.5 per cent year-on-year to $23.4 billion. The unit’s EBITDA was $8.6 billion, down 5.2 percent on the same period of 2015.
Ellis said upcoming investment would focus on the continued densification of Verizon’s 4G network, roll-out of LTE-Advanced and continuing to lay the groundwork for 5G.
“We had good progress on 5G [with] a number of technical and lab trials,” he said. “We’ve moved on to commercial-scale pilots and are very excited about the opportunities [in this area], which we look forward to sharing progress on through the year.”
Verizon’s efforts to develop its IoT offering, largely through acquisition, led to Q4 revenue in the area increasing 21 percent year-on-year to $234 million. Ellis said he “expects to continue these strong trends”.
The company’s wireline business unit recorded a year-on-year revenue decline of 3.1 percent to $7.8 billion and an EBITDA figure of $1.9 billion.
Verizon’s group consolidated operating revenue in Q4 2016 was $32.3 billion, a 5.6 percent decrease year-on-year. Its net income for the quarter was $13.1 billion.
Verizon’s ongoing diversification into content and advertising continues to be a major strand of the company’s strategy. While there was no update offered on the Yahoo acquisition, Ellis was bullish on its AOL and go90 units.
During Q4, its AOL business generated revenue of $532 million excluding traffic acquisition costs. Although this was a 5 per cent year-on-year decline, Verizon attributed the reduction to a deal the company made with Microsoft during Q4 2015 which inflated its numbers for the period. Ellis highlighted Q4 2016 figures are “a significant increase” on figures recorded in Q3 2016.
Despite reports of cuts in the company’s go90 business revealed earlier today, Ellis said the company had seen increased usage of the platform during the last few months of 2016 and was expecting to further utilise its range of digital content assets into the new year.