Verizon touted improving wireless service revenue trends, despite the figure dropping 5.1 per cent year-on-year in Q3, as operating income and EBITDA at the mobile business remained largely flat.
The operator generated $15.8 billion in wireless service revenue in the three months to end-September. While the figure was down from $16.7 billion in Q3 2016, Verizon CFO Matthew Ellis noted the decline was lower than a 6.7 per cent year-on-year drop registered in Q2 2017.
Indeed, on a sequential basis, Verizon’s wireless service revenue grew for the first time in three years.
Operating income at the wireless unit of $7.6 billion in Q3 2017 was down a marginal 0.6 per cent, with EBITDA of $9.6 billion up 0.4 per cent compared with Q3 2016.
Equipment revenue of $4.35 billion in Q3 2017 was up 5.5 per cent from the comparable 2016 period despite a dip in Verizon’s post paid device upgrade rate to 5.5 per cent. Ellis attributed the latter to a shift in device release cycles from major brands including Apple and Google, but said the operator expects to see “more than our fair share” of upgrade activity in the current (holiday) quarter.
Verizon recorded a net increase of 603,000 retail post paid connections. The operator said the number included net phone additions of 274,000, as well as 91,000 tablet additions and 238,000 additions of other connected devices such as wearables.
Unlimited boosts customer spending
Ellis declined to say what portion of Verizon’s base is now on an unlimited plan, stating only the mix between unlimited and its other plans is “as expected”.
After seeing an initial round of customers who switched to unlimited to save money in Q1, Ellis said the trend flattened out in Q2. In the most recent quarter, Ellis reported customers on unlimited plans are instead now stepping up their monthly costs.
“You saw the increase in [average revenue per account] sequentially from 2Q to 3Q for the first time in three years, so we’re seeing good progress there,” Ellis said.
The CFO noted Verizon’s shift to unlimited tariffs predictably increased busy hour traffic on the operator’s network, but indicated it is continuously adapting to handle the load.
Bundling and content
Verizon customers appear to be sticking around as well, as the operator reported overall post paid churn of 0.97 per cent and retail postpaid phone churn of 0.75 per cent.
Unlike rivals including T-Mobile US which have bundled additional perks like free Netflix into their service plans, Ellis said Verizon believes it can maintain a good churn profile without having to include add ons.
However, Ellis did not rule out making some sort of content play.
Referring to previous comments from CEO Lowell McAdam indicating a content deal could be in Verizon’s near future, Ellis said the operator is reviewing its options carefully.
“This is a space where we think there’s an opportunity for us to play, we think that it makes sense for us to play in that space, but we don’t want to launch just a ‘me too’ type product,” Ellis said: “We’re continuing to look at what makes sense for us to launch something that’s differentiated in that space, probably around live programming, but how and when we launch something will be TBD.”