Verizon Q2-2024: strong wireless service revenue and broadband subscriber growth, but consumer FWA lags
Verizon Communications wireless and wireline subscriber growth expectations in the second quarter beat estimates with 148K postpaid phone net additions vs. 118K expected. There were 391,000 total broadband wireline net additions. The company ended the quarter with 11.5 million broadband subscribers, up 17.2% year over year. However, the telecom company posted lower operating revenue that was below expectations. Earnings mostly matched expectations, but were below the year ago level.
“Demand for the service is strengthening as small businesses and enterprises continue to trust the reliability of the product and the speed and east of deployment,” Verizon CFO Tony Skiadas said on Monday’s earnings call.
- Verizon added 160,000 business Fixed Wireless Access (FWA) subs in 2Q-2024 – a record quarterly gain in the category that was better than the 138,000 expected by analysts. That quarterly intake was up from a gain of 133,000 in the year-ago quarter and improved from a gain of 151,000 in the prior quarter. Verizon ended Q2 with 1.52 million business FWA subs.
- The company added 218,000 residential FWA subs in Q2 2024, down from a gain of 251,000 in the year-ago quarter, but ahead of the 208,000 residential FWA subs added in the prior quarter. Verizon ended the period with 2.29 million residential FWA subs.
A recent OpenSignal study revealed that Verizon’s 5G customers are rarely connected to the 5G network – in range just 7.7% of the time compared to AT&T (11.8%) and T-Mobile (67.9%). Verizon has not come close to adding as many FWA subs as T-Mobile has each quarter, particularly in the residential market.
New Street Research expects Verizon to cross the 4 million FWA subscriber mark in mid-August. In New Street’s follow-up note, analyst Jonathan Chaplin points to a recent estimate from the firm that data consumption among consumer FWA subs could be four to five time greater than business subscribers. On that basis, an estimate of FWA capacity for 4.1 million Verizon subs would really equate to 6.1 million total customers, he wrote.
2Q 2024 Highlights:
Wireless: Accelerated growth in wireless service revenue
- Total wireless service revenue1 of $19.8 billion, a 3.5 percent increase year over year.
- Retail postpaid phone net additions of 148,000, and retail postpaid net additions of 340,000.
- Retail postpaid phone churn of 0.85 percent, and retail postpaid churn of 1.11 percent.
Broadband: Double-digit broadband subscriber growth
- Total broadband net additions of 391,000. This was the eighth consecutive quarter with more than 375,000 broadband net additions.
- Total fixed wireless net additions of 378,000. At the end of second-quarter 2024, the company had a base of more than 3.8 million fixed wireless subscribers, representing an increase of nearly 69 percent year over year.
- 11.5 million total broadband subscribers as of the end of second-quarter 2024, representing a 17.2 percent increase year over year.
- Fixed wireless revenue for second-quarter 2024 was $514 million, up more than $200 million year over year.
Other results and FY 2024 forecast:
- Verizon reported adjusted earnings of $1.15 a share for the quarter, in line with analyst expectations, but a slowdown from last year’s adjusted earnings of $1.21 a share. This was also the lowest earnings per share for a second quarter since 2017.
- Total operating revenue came in at $32.8 billion, 0.6% higher than a year ago, but below estimates of $33.8 billion.
- Total wireless service revenue was $19.8 billion, up 3.5% year over year, driven primarily by growth in Consumer wireless service revenue.
- FY-2024 Outlook: Verizon reiterated a 2.0% – 3.5% wireless service revenue growth. It maintained an adjusted EPS of $4.50 – $4.70 versus consensus of $4.58.
References:
Verizon’s 5G coverage provided by its C-band spectrum is shockingly bad, according to Craig Moffett, of MoffettNathanson Research. He said he was stunned six months ago to see that 5G availability at Verizon was in the single digits. In a research paper issued today, he estimated it at just 8%. The reason? “Put simply, C-band isn’t very good spectrum,” he said. The 5G network Verizon is building for this spectrum has “more holes” in it, he said, than you’d find in certain types of cheese.
C-band, at ~3.5GHz, is often hailed as the 5G choice, combining decent coverage with sufficient capacity. Moffett, clearly, is unconvinced, noting that AT&T, another C-band dependent, is similarly crippled.
The amount AT&T and Verizon, but especially Verizon, spent on C-band licenses was “mind boggling,” said the analyst, and a clear case of FOMO (fear of missing out). T-Mobile, by contrast, seems to rely on 2.5GHz spectrum it acquired with its takeover of Sprint, as well sub-1GHz airwaves previously bought at auction. The MoffettNathanson verdict? “Fixing the 5G coverage problem will require money. Lots of money.”
https://www.lightreading.com/5g/verizon-5g-network-is-like-cheese-full-of-holes-says-analyst
Tower Sale?
Reports circulated last week that Verizon is looking to sell 5,000-6,000 towers, potentially bringing in more than $3 billion. When asked about that during today’s earnings call, Verizon CEO Hans Vestberg said he could not comment on any rumor.
“What you should know is that Tony [Skiadas, the CFO] and I are very committed to improve our cash flow,” and whatever they can do to optimize their assets “we will do that … The focus on cash flow is extremely important,” Vestberg said.
https://www.fierce-network.com/wireless/verizons-prepaid-unit-slumps-q2-acp-ends