Verizon today released its fourth quarter numbers and reported 279,000 net phone additions which fell well short of analysts’ expectations. The Wall Streeters had expected the nation’s largest wireless provider to deliver 561,000 net phone additions. Last year’s fourth quarter saw Verizon announced 790,000 net phone additions. Using the calculator app on our phone, we calculated that the carrier had a 65% decline year-over-year in this category. Total retail churn was 1.01% compared to .80% for total retail postpaid churn.
Verizon fails to live up to Wall Street’s expectations
Verizon did add 703,000 retail postpaid net additions and wireless service revenues rose 2.2% to $16.7 billion on an annual basis. It was “a very strong year that put us in a good position,” said CEO Hans Vestberg during today’s conference call. At the end of 2020, Verizon counted 64 cities with its mmWave Ultra Wideband 5G service. The latter delivers the fastest 5G download speed for Verizon customers although the signals do not travel long distances or penetrate structures well. The latest report from Opensignal revealed that Verizon has the slowest average download 5G data speed at 47.4Mbps dragged down by its low-band Nationwide 5G service. Vestberg noted that “All in all, we deployed more than five times more Ultra Wideband sites during 2020, and we launched the Nationwide 5G that now covers 230 million people.”
Verizon’s CEO also had a statement about last year. “2020 was marked by transformational change, including the launch of our 5G nationwide network. We witnessed a mass shift toward virtual collaboration, touchless retail and delivery, remote work, distance learning, and telemedicine.” Vestberg added, “We continued to execute our multi-use network strategy; we were recognized by RootMetrics as the best overall wireless provider, undefeated in all categories; and we continue to be the partner of choice for the world’s most innovative brands. Today, we are excited to lead technological advances beyond mobile devices, and create new opportunities for growth across multiple industries.”
For this year, the number of fast Ultra Wideband sites is expected to nearly double to 14,000 with approximately 20 new cities covered by Verizon’s fastest 5G service. While the pandemic has gummed up the works a little resulting in a smaller pool of possible 5G users, Vestberg said that the release of the 5G iPhone in October was a big deal for Verizon since many of its customers are iPhone users. For 2021, Verizon forecasts wireless service growth of 3%.
Verizon, still the largest carrier in the states, needs to be concerned about T-Mobile’s continued climb. Now number two in the country, T-Mobile earlier this month reported a preliminary report showing that it had 824,000 net postpaid phone additions during the fourth quarter. Fierce Wireless quoted MoffettNathanson analyst Craig Moffett who said, “Verizon’s quarterly results must be seen in the context of a larger-than-normal (but clearly not a ‘supercycle’) iPhone release. ‘iPhone quarters’ typically mean exaggerated activity levels – higher churn, higher upgrade rates, and lower margins. Higher churn favors share gainers (T-Mobile) at the expense of share losers (AT&T and Verizon). AT&T attempted to lock in its base with an exceedingly generous (and expensive) retention offer. Verizon did not.” The analyst said that Verizon had a tough fourth quarter. “But not because of higher losses (churn), but instead because of weaker gains (gross additions). This has a number of impacts; Verizon actually saw lower equipment revenues this Q4 than last. That’s good for margins.”
Verizon’s shares dropped 3.15% today or $1.84 to $56.57. The company’s earnings report wasn’t the only big story of the day for the carrier. A cut Verizon FIOS cable line in Brooklyn led to a major internet outage along the East Coast of the United States and this news might have impacted the company’s shares.
