Verizon’s wireless business made gains in Q3 with strong subscriber additions and rising revenue, but the progress was overshadowed by the continued underperformance of its Oath media business.
On an earnings call, Verizon CFO Matthew Ellis noted Oath revenue dropped nearly 7 per cent year-on-year to $1.8 billion and revealed the business is now not expected to reach its target of $10 billion in revenue by 2020.
While costs at Oath are being “managed well”, Ellis explained revenue growth is “not progressing as fast as we’d like”. However, he maintained the business is “focused on the right things”, adding Oath’s artificial intelligence and data analytics capabilities provide additional value across Verizon’s operations.
The news follows the departure of Oath CEO Tim Armstrong earlier this month, and the transition of COO Guru Gowrappan to the top role to oversee “the next phase of Oath’s global growth strategy”.
Ellis also provided an update on Verizon’s 5G progress in the wake of its launch of fixed wireless access service in four markets on 1 October.
He said much of what Verizon is learning in these initial markets relates to the home installation process, adding this knowledge will benefit the company in 2019 when it expands the 5G offering to a larger audience using 3GPP standards-based technology.
Ellis said the timeline for launch of standards-based equipment will be determined by manufacturers, but noted the operator will be ready to deploy as soon as kit becomes available.
On the mobile front, the CFO said Verizon was pleased by the Federal Communications Commission’s efforts to streamline small cell regulations, but doesn’t expect those rules to increase the pace of its 5G buildout.
Ahead of the 5G transition, Ellis said Verizon has plenty of room to continue growing its wireless business by adding new customers, moving existing subscribers up to higher price tiers and upgrading their devices.
In Q3, Verizon added 515,000 post paid subscribers (excluding enterprise customers), compared with 603,000 in the comparable 2017 period. It ended the recent quarter with 112.1 million post paid connections, up from 109.7 million.
Service revenue of $16 billion was up from $15.8 billion in Q3 2017 and equipment revenue rose to $5.4 billion from $4.4 billion. Total wireless revenue of $23 billion was up 6.5 per cent year-on-year.
Consolidated revenue, including the company’s wireline and media businesses, of $32.6 billion was up 2.8 per cent from Q3 2017.Subscribe to our daily newsletter Back