February 3, 2020
Verizon Communications added 790,000 prepaid phone connections during Q4 2019, compared with 653,000 during the same period a year earlier, surpassing the expectations of JPMorgan Chase analysts who predicted 750,000 such connections. A free one-year Disney+ subscription for Verizon wireless customers may have helped lure new customers. AT&T added 229,000 postpaid connections and T-Mobile US added 1,000,000. Postpaid customers typically pay monthly under longer-term contracts and are less likely to change providers.
The Wall Street Journal reports that, “Verizon took a roughly $200 million charge to write-down the value of its media business, which is home to Yahoo and AOL web properties … [while] revenue within Verizon Media Group was flat year-over-year at about $2.1 billion as it continued to confront declining desktop search revenue.”
Verizon’s Fios service in the quarter “lost 51,000 connections … and added 35,000 Fios Internet connections.” Verizon’s shares dipped 2 percent in premarket trading, having “advanced about 10 percent over the past year, lagging behind a broader market rally.” Verizon, which reported 119.8 million wireless connections including devices such as tablets and smartwatches, is “up from 118.65 million at the end of September.”
Verizon is building out its 5G service, based on ultra high-frequency airwaves, which “can’t travel long distances or penetrate walls,” whereas its rivals are using mid- and low-band spectrum. Verizon is encouraging wireless customers “to migrate to unlimited data plans … [and] families to mix and match the plans they use, which helps the carrier nudge consumers to pricier plans when they want higher-quality TV streaming or more hot-spot usage.”
With its loss of Fios customers, Verizon has started “a long process of de-emphasizing video,” also ending the practice of cable bundles and instead allowing customers to “mix the home Internet and cable television plans they want without long-term contracts.” WSJ adds that, “overall, net income attributable to Verizon was $5.1 billion in the fourth quarter, compared with $1.9 billion a year earlier … [while] revenue rose to $34.8 billion from $34.3 billion a year ago.” It also “cut $5.7 billion of the $10 billion in expenses it has vowed to eliminate by 2021.”
Variety reports that, “the one-year-free Disney+ offer, available to eligible Verizon customers through June 1, 2020, was one of the factors for the lift” of its subscription numbers, said chief financial officer Matt Ellis, who nonetheless did not reveal “how many Verizon customers signed up for the streaming service.”
According to analysts, “about one-third of Disney+’s initial sub base has come via the Verizon partnership.” Ellis also revealed that, “about half of Verizon’s wireless customers are on unlimited plans,” although he previously said that “about 17 million wireless customers were eligible for the Disney+ offer.”