Verizon Revenue Drops as Pandemic Slows Phone Shopping--2nd Update
24 Juillet 2020 - 6:26PM
Dow Jones News
By Drew FitzGerald
Verizon Communications Inc. continued to add cellphone customers
during the pandemic, though quarterly revenue declined in its core
wireless business and its online advertising unit.
The largest U.S. cellphone carrier by subscribers reported a net
gain of 173,000 postpaid phone connections during the three months
that ended in June. That figure included past-due accounts that
were still in service under the federal Keep Americans Connected
pledge.
Verizon counted 119.9 million active wireless connections, which
include tablets, smartwatches and other cellular devices, at the
end of June.
U.S. wireless and broadband-service providers agreed earlier
this year to waive late-payment and overage fees and keep service
active for customers unable to pay their bills during a pandemic
that had already forced tens of millions of Americans to work from
home. The program ended in June, putting hundreds of thousands of
customers at risk of losing service.
Verizon's latest report only covered the second quarter, when
the pledge was still active. The carrier said it enrolled many
customers in extended repayment plans in July to keep them on its
rolls.
"We believe the vast majority of these accounts can be cured
over time," Chief Financial Officer Matt Ellis said during a
conference call with analysts, though he warned that expectation
hinges on the economic environment.
About 1.5 million personal and small-business accounts took
advantage of the extra grace period for late payments, Mr. Ellis
said, adding that most of them made some payment and roughly a
third were current by the end of June.
Rival AT&T Inc. on Thursday reported a net loss of 151,000
postpaid phone subscribers, a figure that counted 338,000 past-due
subscribers as disconnections, though they maintained service
during the pledge.
Verizon, which temporarily closed its retail stores as the
coronavirus pandemic spread across the U.S., said its
device-upgrade rate fell to 3.7% from 4.3% a year earlier as weak
retail traffic crimped smartphone sales. The company said more than
60% of its locations were open by the end of the second quarter and
it expects to be close to fully open by the end of July.
Overall, the company's total revenue slipped 5.1% to $30.4
billion. Wireless-service revenue fell 1.7% in the second quarter
from a year ago, but the company forecast it would be flat to down
1% in the third quarter. Revenue in the company's media business,
which includes its Yahoo and AOL properties, declined 25% in the
quarter to $1.4 billion.
Net income attributable to Verizon reached $4.7 billion, or
$1.13 a share, compared with $3.9 billion, or 95 cents a share, a
year earlier. Fewer phone sales helped boost Verizon's bottom line
because devices sold to customers offer carriers little to no
profit. Total equipment costs dropped 18%.
The Covid-19 pandemic upended companies' profit projections this
spring and forced many to set aside more cash for unexpected
expenses. Verizon earlier this year pulled its revenue guidance and
lowered its annual adjusted per-share profit projection to a range
between 2% growth and a 2% decline. The company on Friday
reiterated that prediction.
Executives have also said the essential nature of cellphone and
broadband service could benefit earnings. The company in April
agreed to buy Blue Jeans Network Inc., a videoconferencing service
that targets corporate clients, as the pandemic triggered a
work-from-home wave.
The company's consumer unit reported a net gain of 10,000 Fios
broadband subscribers despite a temporary pause in some in-home
installations. Fios pay-TV customers dropped by 81,000 as more
Americans cut the cable cord in favor of cheaper streaming video
options.
Write to Drew FitzGerald at andrew.fitzgerald@wsj.com
(END) Dow Jones Newswires
July 24, 2020 12:11 ET (16:11 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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