VZ Verizon Communications Inc

By Sarah Krouse 

Verizon Communications Inc. notched large gains in phone subscribers in the third quarter, aided by a revamp of its unlimited plans that shaved about $5 off customers' monthly bills.

The carrier said it added 444,000 net new postpaid phone connections during the period, compared with the 295,000 such connections it added a year earlier. Those new phone connections in the third quarter handily exceeded analysts' consensus estimates of about 300,000.

Postpaid customers are considered lucrative for carriers because those subscribers typically pay their bills monthly under longer-term contracts.

Matt Ellis, the company's finance chief, said that momentum had continued into the fourth quarter and that Verizon expects to attract additional customers through its recently announced partnership with Walt Disney Co. to offer people on unlimited data plans a year of free access to the new Disney+ streaming service.

Wireless promotional activity picked up during the period, which included the launch of Apple Inc.'s iPhone 11. Carriers rolled out buy-one-get-one-free offers and other deals in September.

Americans' cellphone bills are falling as carriers compete for customers in an ultra-saturated market and cable companies increasingly offer lower-cost, competing services. The consumer-price index for wireless phone service -- an indicator of current offers from cellphone service providers -- fell 2.8% in September from a year earlier, the 13th straight month of declines, according to the Labor Department.

Carriers are also increasingly offering additional perks such as video and music streaming.

Verizon, the largest U.S. carrier by subscribers, is the first big wireless company to report earnings for the period. AT&T Inc. and T-Mobile US Inc. are scheduled to release their results Oct. 28, while Sprint Corp. hasn't yet announced a date.

Verizon is trying to prove to Wall Street that it can be more than a connectivity pipe and can find ways to monetize the faster 5G service it is rolling out. Early reviews of its 5G service have been mixed because it is ultrafast but has a limited reach.

The company said Friday it would bring 5G service to Omaha and Dallas for a total of 15 cities so far this year. It has promised to bring the service to 30 cities by the end of the year and said it was on track to meet that goal.

Meanwhile, the company is trying to shed costs, promising to cut $10 billion by 2021. It said it has achieved $4.6 billion of that total since last year.

Verizon has largely balked at buying into Hollywood or directly competing in the streaming wars as rival AT&T has, opting instead to form partnerships with content providers.

Verizon's Disney+ offer gives Disney a large pool of viewers as it launches and could help Verizon retain current customers and draw more subscribers to its unlimited plans, a priority for the company.

Hans Vestberg, the carrier's chief executive, said the agreement proved the model of partnering with top brands that Verizon had decided to pursue.

UBS Group AG analysts estimate that there are about 17 million Verizon wireless customer accounts eligible for the Disney+ offer. The streaming service would normally cost $6.99 a month and is scheduled to launch Nov. 12.

AT&T, meanwhile, is working on its own streaming video service called HBO Max that it plans to unveil next week and formally launch next year. AT&T has aggressively pursued content ownership and creation and is in the throes of a battle with activist Elliott Management over its strategy.

Verizon had 118.65 million wireless connections, including tablets, smartwatches and other devices, up from 118.12 million at the end of June.

About half of its wireless customers are now on unlimited plans, executives said, an increase from just below that threshold last quarter. Verizon is trying to move more of its customer base to unlimited plans, hoping that subscribers will move up through its tiers of service over time.

Verizon's cable offering, Fios video service, continued to lose customers. It shed 67,000 customers in the third quarter.

Overall, net income attributable to Verizon was $5.19 billion, up from $4.92 billion a year earlier. Quarterly revenue edged up slightly to $32.9 billion from $32.6 billion a year ago.

Revenue within Verizon's media unit, which includes the Yahoo and AOL properties it acquired, was $1.8 billion, down 2% from a year ago.

Verizon shares rose 0.8%, to $61.07, in premarket trading.

Write to Sarah Krouse at sarah.krouse@wsj.com

(END) Dow Jones Newswires

October 25, 2019 10:38 ET (14:38 GMT)

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