Verizon shares hit a 10-year low on Friday after the release of third-quarter results

The largest mobile operator in the United States learned a little more about basic economics during the third quarter. After increasing administrative charges for postpaid subscribers from $1.35 to $3.30 per voice line, the number of postpaid telephone subscribers decreased by 189,000 on an annual basis during the third quarter with a rate of 0.88% churn. Churn is the percentage of subscribers (sometimes in a specific category) who leave one operator for another and it increased during the quarter due to higher administrative costs.

53% of Verizon consumer subscribers own a 5G-enabled handset

In the consumer sector, nearly 53% of Verizon’s postpaid wireless phone subscribers owned a 5G-enabled handset during the third quarter. While the carrier has faced higher infrastructure costs due to the seemingly endless rollout of 5G, pricing needs to be watched closely thanks to stiff competition between Verizon, T-Mobile, and AT&T. And later this year, Boost plans to launch its Infinite service which provide 5G service in the United States at a lower price than the big three.

On the business side, Verizon added 197,000 net new postpaid phone subscribers in the three months. This allowed it to record its fifth consecutive quarter with at least 150,000 net new postpaid telephone subscribers in its business unit. The churn rate for the postpaid telephony business in the business sector was 1.10%. Business Wireless Group revenue increased 5.7% year on year to $3.3 billion. The increase is due to higher prices and customer growth.

Combining both consumer and commercial units, net new postpaid phone subscribers in the quarter were 8,000. This was well below Wall Street estimates calling for Verizon will add a total of 35,000 net new postpaid phone subscribers during the quarter.

Verizon Chairman and Chief Executive Officer Hans Vestberg said, “We took a number of steps in the third quarter that helped improve operational and financial performance, but we know there is still work to be done. TO DO. The pricing actions we took earlier this year, as part of our new cost savings program, show that we are taking deliberate and strategic decisions in our decisions to strengthen our business. At the same time, we are focused on executing our 5G strategy as we cover all major markets and accelerate our C-Band network build. We are on track to reach 200 million POPs in the first quarter of 2023.”

Meanwhile, Verizon Chief Financial Officer Matt Ellis blamed rising plan prices for disconnects on the consumer side and said “the pressure” would continue into the fourth quarter. Wall Street analysts weighed their comments. “What people forget is that the biggest company in the industry has the most customers to lose every quarter,” said Michael Hodel, director of telecommunications and media research at Morningstar.

Ellis also said that “the actions we have taken over the past two quarters are gaining momentum in the market. We anticipate that we will be able to continue this momentum in the future. Our financial discipline, combined with our healthy balance sheet, has allowed us to increase our dividend for a 16th consecutive year, which represents the longest current streak of dividend increases in the telecommunications industry in the United States.

Verizon shares hit their lowest price in more than a decade

Overall, Verizon reported third-quarter revenue of $34.2 billion, up 4% from gross collected in the same quarter last year. Net income of $5.02 billion was down 23.3% from the net income of $6.55 billion it reported in the third quarter of 2021. Diluted earnings per share fell 24.5 % from $1.55 in the third quarter of last year to $1.17 in the third quarter of this year.

Verizon reported a pretax loss of $881 million that included adjusting pension liabilities to reflect current stock prices and adjusting certain assets related to the TracFone acquisition.

Meanwhile, investors sent shares of Verizon down $1.65 or 4.5% on Friday to $35.35. The day’s low, $34.55, was the lowest price for the stock in over a decade. The 52-week high is $55.51 (which seems so far away) and the 52-week low is the nadir of $34.55 hit on Friday.

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