- Verizon reported 8K consumer postpaid phone net losses in Q2 2024
- The prepaid division continued to decline, with 624K net losses, including 410K related to the shutdown of the ACP
- The company reported total broadband net additions of 391,000 during Q2
The net losses in Verizon’s consumer postpaid division continue to improve – only 8,000 phone net losses in Q2 2024 compared to the loss of 136,000 in the prior quarter – but prepaid net losses of 624,000 were much worse than analysts anticipated.
Of course, the driver in prepaid net losses was the demise of the Affordable Connectivity Program (ACP), which everyone knew was coming, but analysts were expecting net losses in the range of 325,000-357,000. The higher losses also came with weak prepaid ARPU of $30.90.
Verizon’s total wireless service revenue in Q2 2024 was $19.8 billion, a 3.5% increase year over year, buoyed by price hikes. Retail postpaid phone churn was 0.85%.
Overall, Verizon reported stable postpaid phone subscribers, but with a much bigger contribution from second lines than analysts expected, according to analyst Jonathan Chaplin of New Street Research (NSR).
NSR had expected a loss of 70,000 customers, excluding second line adds of 75,000; Verizon reported a loss of 118,000 customers, excluding second line adds of 110,000. “Investors will find this disappointing,” he said in a research note.
Indeed, Verizon shares were down more than 6% this morning, trading at $39.04.
The business division, which typically fares better than consumer reported 268,000 wireless retail postpaid net additions in Q2 2024, which included 156,000 postpaid phone net adds.
Chaplin said Verizon probably will report stable wireless customer growth for the year, but it will all come in the fourth quarter, which traditionally is a busy time for all wireless carriers.
Broadband shines
Like prior quarters, the highlight in the 5G story has been fixed wireless access (FWA). Verizon added 378,000 FWA customers in Q2, ending the quarter with a base of more than 3.8 million FWA subscribers, well on its way to meeting its goal of 4 million to 5 million FWA subscribers by the end of 2024.
Fixed wireless revenue for the second quarter of 2024 was $514 million, up from $452 million in the prior quarter and up more than $200 million year over year.
The company reported total broadband net additions of 391,000, marking the eighth consecutive quarter with more than 375,000 broadband net additions. Consumer Fios net adds tallied 24,000.
The company ended Q2 with 11.5 total broadband subscribers, which compares to 1.1 million at the end of Q1 2024.
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.
More than a rebrand
Last month, Verizon unveiled a rebrand that’s designed to connect the brand more intimately and emotionally with customers. The company’s trademark “V” is still red but now set off by warmer yellow hues.
In a research note, Third Bridge analyst Jamie Lumley surmised that Verizon is delivering on the upper end of its 2024 wireless service revenue guidance but continues to be outflanked by T-Mobile in the consumer retail space.
“With customer losses in four of the last five quarters, Verizon may need more than a new logo to reignite customer growth," Lumley remarked.
C-band expansion
Executives said during the earnings call that nearly 60% of its C-band spectrum is deployed on its planned sites. Suburban and rural areas are now the focus of that rollout.
In a note for investors today, MoffettNathanson analyst Craig Moffett said C-band’s propagation challenges were again front and center when OpenSignal presented its Network Experience report a few weeks ago.
Verizon’s “5G Availability” actually fell to a level below 8%, meaning Verizon’s 5G customers are almost never actually connected to the 5G network; they’re in range and connected just 7.7% of the time. T-Mobile’s 5G availability is almost nine times higher, he noted.
The coverage deficiency in 5G is tied to Verizon’s “continued weakness in fixed wireless access,” Moffett wrote. “They have never come close to capturing as many quarterly net additions as T-Mobile – particularly in the residential market, which is the best comparison - despite similar pricing and homes passed. The issue isn’t capacity, in other words, it’s availability.”
AT&T reports its second-quarter results on Wednesday, and T-Mobile reports next week.