Verizon Communications Inc. posted 3Q18 results on Tuesday (23 October), which beat expectations on the top and bottom line. Total operating revenue rose 2.8% YoY to $32.61bn vs $31.72bn posted in 3Q17, while diluted EPS rose to $1.22 compared with $0.98 recorded in 3Q17. Both quarterly profit and revenue were ahead of consensus estimates – Refinitiv consensus data had expected earnings of $1.19/share on $32.51bn in revenue. Net new phone subscribers were also ahead of expectations as customers took advantage of its subsidies for Apple’s latest iPhones late in the quarter under review. The company said it added a net 295,000 monthly phone subscribers during the quarter, easily beating the FactSet estimate of 161,000.
However, Verizon’s media and traditional phone businesses did not fare as well with revenue from Oath, its digital media subsidiary (which own websites including AOL and Yahoo), falling 7% YoY to $1.8bn in the quarter under review. Verizon said it does not expect Oath to reach its previous goal of $10bn in revenue by 2020, as it struggles to generate as much revenue as it had hoped from mobile advertising, to make up for shrinking desktop usage of its websites.
Verizon’s wireline business, which sells traditional phone service and its Fios video and internet products, recorded a revenue decline of 3.7% YoY to $7.4bn. It lost 63,000 Fios video subscribers during the quarter, more than the 18,000 it lost last year, as viewers continue to favour cheaper internet-based TV services, over paying for pricier cable packages, according to Reuters. It added 54,000 Fios internet customers, fewer than the 66,000 Verizon added a year earlier.
Verizon said it is on track to reach $10bn in cumulative cash savings by 2021.
Following the results, Verizon shares rose c. 4.1% to close at $57.21 on Tuesday – its highest level in c. 18 years.