Verizon said it lost 307,000 retail postpaid subscribers on a net basis in the first quarter.
Verizon, the once-unstoppable cellphone leader in the USA, lost key wireless customers for the first time, even as it brought back unlimited data plans to counter smaller rivals. Investors will look for indications from management as to how unlimited plans are affecting Verizon's financials and how the company plans to adapt to the increasingly competitive wireless environment.
According to the company, revenue dropped from $32.17 billion in the same period past year to $29.81 billion, missing analysts' estimates of $30.77 billion.
This New York-based carrier was once the superlative leader of the wireless industry in the United States, whereas now it is battling to retain subscribers and getting them to opt for the paid premium service. Considering that analysts expected Verizon to add almost 250,000 customers in the first quarter, that's dire.
The good news for Verizon is that since it introduced unlimited data plans, it's started adding customers again. Prior to the launch of the unlimited plan, the carrier had a retail postpaid phone net loss of 398,000.
The company has also pursued revenue streams outside its core wireless business.
Verizon's retail postpaid connections base grew 1.2 percent year over year to 108.5 million, and retail prepaid connections grew 0.5 percent to 5.4 million.
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Shares of Verizon (VZ, Tech30) fell almost 1.5% on the news.
Capital expenditures totalled $3.1 billion in first-quarter 2017, as Verizon carried on spending on its network. But Verizon doubled down in 2014 with its $130 billion purchase of Vodafone Group PLC's 45% stake in their Verizon Wireless joint venture. Verizon has had quarterly losses in post-paid phone customers before, but not when other wireless connections are included. Analysts expected adjusted earnings per share of 99 cents and revenue of $30.77 billion.
Industry analysts have questioned whether the company will pursue a more transformative deal as its main competitor AT&T seeks to diversify its business through a planned acquisition of Time Warner.
"We're confident in executing our strategy organically", Chief Financial Officer Matt Ellis said during a conference call, commenting on the Bloomberg report.
The results fell short of Wall Street expectations.
Total wireline revenues declined 0.6 percent, to $7.9 billion, comparing first-quarter 2017 with first-quarter 2016.
For its Fios service, which delivers internet and TV to people's homes, Verizon added 35,000 internet subscribers, lost 13,000 cable subscribers and lost 8,000 voice subscribers. Verizon's 2017 effective tax rate should fall within a range of 34 to 36 percent, the company said, which would exclude any impacts from the Trump administration's potential tax reform. Verizon's shares were down 1.2 percent at $48.33 in midday trade.