Verizon Reports First Ever Loss Of Wireless Subscribers

Tyler Durden's picture

While Verizon, the largest US wireless carrier by subscribers, reported earnings which missed on both the top and bottom line, it was another data point that has caught the market's attention this morning making VZ the leading decliner in the DJIA: in the first quarter of 2017, Verizon posted its first ever quarterly net loss of wireless subscribers.

The decline took place despite Verizon's relaunch of its "unlimited" wireless plan, and while the company said that the move “positively changed the trajectory of customer additions” in the quarter, it still reported a net decline of 307,000 retail postpaid connections during the first three months of the year, including 289,000 phone losses. It remains to be seen if the unlimited plan will help with organic declines - the company also said that before the launch of its “Verizon Unlimited” plans in mid-February, Verizon had a retail postpaid phone net loss of 398,000; after the launch, Verizon said it added 109,000 retail postpaid phone connections, as the WSJ reported.

The subscriber drop underscored the recent adverse trend: total Verizon revenue declined 7.3% to $29.8 billion, missing estimates $30.8 billion .

Looking at the components, total wireless revenue of $20.88 bn declined 5.1% yoy and compared to estimates of $21.4 bn, while EBITDA of $9.4 bn declined 7.5% yoy (45.1% margins) and compared with estimates of $9.87 bn (46.1% margins).

Wireless metrics included a loss of 307K postpaid subs (vs. +350K expected) and included -289K phone subs vs. -175K expected. Total churn of 1.39% and postpaid churn of 1.15% compared with estimates of 1.19% / 0.95% respectively. Positively, VZ noted an improvement in the phone loss trajectory post the announcement of unlimited data plans in February (+109K). Postpaid phone churn also remained below 0.90% in the quarter.

The wireline segment that includes its FiOS service logged a revenue decline of 0.6%, to $7.9 billion.

Verizon expects improvement in wireless service revenue this year, with total revenue “fairly consistent” with 2016. But that stands to leave Verizon in a familiar position: slowing growth on the top and bottom lines, and a sliding stock price.

 

Over all, for the March quarter, Verizon reported a profit of $3.45 billion, or 84 cents a share, compared with $4.31 billion, or $1.06 a share, in the year-ago period. Excluding certain items, Verizon earned 95 cents a share.

ADditionally, as Goldman notes, Verizone utilized a portion of its $11.0 bn US debt raise to contribute $3.4 bn to the pension plan which negatively impacted reported cash flow from operations. That said adjusting for the pension contribution of $3.4 bn still left Cash from operations of $5.1 bn below expectations of $5.9 bn. Adjusted FCF was $2.03 bn while FCF after dividends was -$329 mn. Verizon's CFO in 1Q16 included $1.98 bn of securitization proceeds which also needs to be considered when examining yoy trends. On the balance sheet, VZ finished the quarter with $116.5 bn of debt, $4.3 bn of cash, 2.7x gross leverage and 2.6x net leverage. The debt balance included $1.28 bn of ABS borrowings raised in the quarter.

Goldman's summary take:

Overall we expect the weak operating performance to keep investors focused on the company's strategic options particularly following CEO Lowell McAdam's commentary around potential M&A on Tuesday. Apart from potential M&A, additional focus for the call will include: (1) future cash flow dynamics; (2) more color on wireless competition post the unlimited data launch, and (3) an update on FiOS performance given weaker than expected net add performance in the quarter.

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Iconoclast421's picture

Ofc. I went two years without paying a dime for 300 minutes, 300 texts, and 100MB of data. So I went over once or twice but that was only like $10. When Ringplus went away, they moved me to Ting where I got 3 months of free credit! My first bill in over 2 years is coming next month, and its still gonna be less than $20. Both AT&T and Sprint have better MVNOs. Their networks might be worse but hey its a lot less money.

 

It jsut makes no sense to get on one of these $60-$100 a month plans. Why? So you can watch youtube over LTE? Is it really that important? I play a predownloaded audio book or podcast when not in wifi. It only costs a few MB to check a map or to do most stuff that dont involve video.

Looney's picture

 

Verizon Reports First Ever Loss Of Wireless Subscribers

Rotary Phones are back in vogue!   ;-)

Looney

Yukon Cornholius's picture

So long as they come with the perky switch-board operators!

Yukon Cornholius's picture

Lol.

Municipal, state and federal laws don't apply to us. We're omnipotent. That's potent with an omni in front.

PAPA ROACH's picture

It's what happens when the average consumer is getting fucked like a housecat in every non-discretionary way; +$ healthcare, +$ property taxes, +$ insurances, and no wage growth (if you're lucky to be gainfully employed in a real job).

 

Consumer trends will continue to look for bargains just to survive.

thetruthhurts's picture
Verizon.  fuck Verizon.

They cut my unlimited data and my bill went way up.  I told them to go back the way it was. They said no that plan was no longer offered.

So I called T-Mobile and moved my entire company over to them.

Verizon is NOT exempt to the laws of economic's.

Fuck Verizon.

847328_3527's picture

I don't need anyone to call me or for me to call anyone so I pay zero, zip, nada.....

I am "exceptional!"

BarkingCat's picture

I switched from Verizon to T-Mobile over 10 years ago because Verizon pissed me off one time too many. Their customer service sucked.

I remember being late with payment by 1 day and getting dropped and then having to pay resumption of service charges.

As soon as my contract was up, I was gone. My bill went down and minutes went up.

T-Mobile pissed me off a few times too over the years but never like Verizon.

I hope those fuckers lose more customers...and yes, I hold a grudge for a very long time.

RAT005's picture

Pageplus: $28.05 1500 minutes, 3000 texts, 1 gig of data on Verizon network.  no contract.

Abbie Normal's picture

Current monthly all-inclusive VZN bill for my spouse is $52 for one phone with unlimited talk & text, and 1GB data.

My Tracfone bill is $14.76 for 1000 min/text/1GB data, and it uses the same VZN network.

Once more users figure this out, the exodus from the major carriers will be epic.

 

j0nx's picture

I switched to verizon from ATT about a year ago because I was getting shit signal everywhere in NoVa with ATT. Verizon is absolutely no better at all and in fact signal might actually be a little worse now than with ATT. It costs me $25 more a month to boot. Switching carriers is a PITA as well because you can't use an ATT phone with verizon and vice versa so you need to buy all new phones if you want to switch. Sigh.

FireBrander's picture

You can buy unlocked phones that will work on both CDMA and GSM networks.

RedBaron616's picture

Actually, I dumped Verizon's landline when they decided to start using me as a cash cow. Prices seemed to go up every year. I finally got fed up with them. I now use MagicJack for something like $50/year or so. Take that, Verizon.

FireBrander's picture

"It just makes no sense to get on one of these $60-$100 a month plans"

Cricket Wireless...$60 month unlimited...full throttle LTE to 22GB of data...then it may be "reduced speeds". If you need internet access, but are a low usage type (my siblings), it makes sense to pay the $60 and cancel the landline and DSL/Cable internet. Very easy to create a hotspot with your phone.

There are shitloads of Verizon used phones for sale...Galaxy 5's for $89...now I know why...custome base is melting.

I suspect they have a lot of geezer users too that are simply dieing..I know an elderly couple with a single phone, ~$120 month plan from Verizon...they barely use it, but they WILL NOT CHANGE...stuck in their ways; they will die Verizon customers at ~$120 month.

PS> Cricket uses ATT's network...sitting in my moms basement |:)|, I get a 4G LTE Signal...I had T-mobile, no signal in the basement...sketchy 3g upstairs, had to go outside to get a good signal.

Raffie's picture

I had Sprint and for 3 years in the Seattle area and crap coverage. Had to rely in wifi for most internet connection.

In the malls at the Sprint Kios areas they had max speed for internet, but once you walk away the bars drop and internet speed went to crap. So later on I move to anyothber city and even worse connection to internet.

Then for 2 weeks there was no connection at all for phone or anything. I could not even dial 911 if I had to.

So went to Team Mobile doing the ONE plan for $70mo unlimited. Been so happy since then.

Sprint is crap and hope the company implodes for being such a poser company. Also Sprint sells the back end on their cell towers to I think the company was Cricket network. So they screw their customers over to double dip the cash.

FireBrander's picture

Cricket is ATT for me; very pleased.

NugginFuts's picture

Subscribers: "Can you hear me now?"

yogibear's picture

Bullish! Have no fear, the fed's banks will be buying more shares.

wisehiney's picture

Highly deflationary.

SomethingSomethingDarkSide's picture

No wonder, mid tier data plan at a low, low $120/mo !!!

Pigeon's picture

That Yahoo buyout is looking smarter and smarter every day! /s

ZeroPoint's picture

Ok team, carbon-based traders panic, algos drive the stock up today. Break!

 

 

 

Bam_Man's picture

They will just mercilessly gouge their remaining sucker customers to make up the difference.

Just like they do on the Cable TV side of the business.

Dave Thomas's picture

MetroPCS, shitty signal in the burbs, but hey I hate talking to people anyways. Unlimited calling and text and 1GB of data ( I don't watch movies on my phone duh. ) 35 bucks a month.

 

Yes We Can. But Lets Not.'s picture

I was with Verizon for many years.  Grew to loath them, finally dumped them a year ago.  

I use Cricket, owned by AT&T.  Same deal, though I think I get more data, dunno.  Their $35 charge hits my credit card each month.  So, basically a buck a day.  No hassles.  Works fine here in the city, and worked in the sticks/flyover.  Seems like a square deal.

Dave Thomas's picture

Yeah, all of the bargain basment wireless carriers get squeezed out by Verizon / AT&T, you'll notice in the ritzy parts of town you'll get a bad signal. But next to a trailerpark it's like a blowtorch signal wise lol. Highways no problem.

I switched to Metro after paying 117 dollars a month for the same service basically.

Yes We Can. But Lets Not.'s picture

And no stupid damned contract with Cricket.  Month to month deal.

RedBaron616's picture

In my area, MetroPCS is advertising something very similar for $30/month.

GunnerySgtHartman's picture

Virgin Mobile - unlimited talk/text and 5 GB of 4G LTE data (throttled to 2G after 5 GB).  $35/month prepaid no-contract.  Been with them for over four years now ... have yet to hit the monthly data limit.

E.F. Mutton's picture

Living in the boonies and needing a reliable connection for work, Verizon has been really good for me. 

I still have spontaneous fits of Tourette's-Like swearing when someone says "T-Mobile" though

 

11b40's picture

Yes, me too.  VZ only good alternative, but I offset the cost by dropping ATT&T for my home land line and adding the VZ Internet phone service.  $20/mo flat rate and keep the same home phone number we have had for over 20 years.

GunnerySgtHartman's picture

I still have spontaneous fits of Tourette's-Like swearing when someone says "T-Mobile" though

Ha, that got me thinking how Max Headroom might say "T-Mobile"!

ChemtrailPilot's picture

I've been using a Republic Wireless voice/text-only plan for $10/month for years. I have no idea what Verizon charges but I guarantee it's not even close to competing with that.

Sir Raisin's picture

I recently switched from Verizon to Total Wireless, which uses Verizon's network. It has been a seamless transition, and I pay $35 for unlimited talk & text, plus 5GB of data. I have been very satisfied with it.

rejected's picture

POTS has turned into POSTS

Americans are so busy talking, they can't hear a word.

Dre4dwolf's picture

It doesnt have anything unique to sell and its 30% more expensive than most carriers.

 

silverer's picture

They are more expensive. They have the best coverage, but is it worth it? I think for many, the answer is becoming "no". Because if 5% of your areas are dead spots, big deal. It's some peace and quiet and a good excuse not to have to call your spouse if you don't want to. "Sorry dear, I had no coverage".

erkme73's picture

The problem is for those of us living in BFE, VZ is the ONLY service that works.  My home in TN is so far off the beaten path that no one else offers any service.  Yet VZ offers LTE speeds of 40/40 using their towers.   Expensive, yes, but for some of us, that's the only option.

Abbie Normal's picture

If VZN works for you out in the boonies, then any of the MVNOs that use VZN's network should also work at half the price or less.  Look into Republic, PagePlus, Tracfone, StraightTalk, etc. that uses VZN'S CDMA network.

Calls and Putz's picture

I wonder how much of a dent Google's Project Fi is making in the wireless business?

Abbie Normal's picture

Maybe it's making a dent in the big cities but with Sprint, T-Mobile and US Cellular as the carriers, it still doesn't work in much of the country.

Salsa Verde's picture

Not a big fan of Verizon but I have gotten calls in the craziest places with them; 35 miles from the nearest road in the middle of the Mojave Desert with no towers in site in any direction, I still got a random call from my buddy (no signal bars showing) when I was checking my phone to see what time it was after I woke up.  Super creepy, the whole point of the trip was isolation; I felt as though the phone was mocking me.

Abbie Normal's picture

Holding a 50-mile range transmitter next to your head or your jewels is perfectly safe -- as long as you don't mind being sterile or getting brain cancer down the road.

Catullus's picture

46% margins on what's essentially a commodity. AND they have the right to spy on you.

Electric power industry margins are 3%. That's where they need to be for wireless carriers.

jamesmmu's picture

WOW! SHOCKING! Is this why they are buying yahoo? is it really helpful? lol