Unlimited Plans Help Boost Verizon Subscriber Figures

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Telecommunications giant Verizon Communications (NYSE: VZ) reported second-quarter results earlier this morning. The company was able to reverse the subscriber losses that it suffered last quarter, which was the first time it had lost postpaid customers. Here's what you need to know about the company's second quarter.

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Verizon results: The raw numbers

Metric

Q2 2017

Q2 2016

Year-Over-Year Change

Total operating revenues

$30.5 billion

$30.5 billion

0.1%

Adjusted EPS

$0.96

$0.94

2%

Total retail wireless connections

114.5 million

113.2 million

1.2%

Retail churn

1.18%

1.19%

(1 basis point)

Average revenue per account (ARPA)

$134.89

$145.09

(7%)

What happened with Verizon this quarter?

It was a busy quarter for Verizon, as it closed the acquisition of Yahoo!'s operating business. That deal had been plagued with controversy due to data breaches. Upon closing, Yahoo! CEO Marissa Mayer stepped down, and Yahoo! was combined with AOL into a newly established Verizon subsidiary called Oath.

In addition to that deal closing, there were some other notable developments during the quarter:

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  • Net increase of 614,000 retail postpaid connections, driven in part by the recent launch of Verizon Unlimited.
  • Retail postpaid connections increased 1.2% to 109.1 million, with retail prepaid connections gaining 1.4% to 5.4 million.
  • Verizon Unlimited expectedly caused an increase in LTE network usage.
  • Approximately 75% of postpaid customers are now on unsubsidized service plans.
  • Total Fios digital connections increased 2.1% to 14.3 million.
  • Capital expenditures were $3.9 billion.

What management had to say

"Verizon reignited its growth engine in the quarter, both adding and retaining wireless customers while scaling our media business and continuing to invest in our superior networks," CEO Lowell McAdam said in a statement. "With record customer loyalty and a clean sweep of third-party network quality results, we're leading the way to provide customers with next-generation broadband, smart cities, telematics, media and Internet of Things services."

Looking forward

Verizon's guidance for full-year 2017 is unchanged from last quarter, and it still expects consolidated organic revenue to be "fairly consistent" with 2016 levels, with adjusted EPS to also be similar to revenue trends. Wireless service revenue and equipment revenue trends are expected to improve. Capital expenditure outlook for the year ($16.8 billion to $17.5 billion) is unchanged.

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Evan Niu, CFA has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Verizon Communications. The Motley Fool has a disclosure policy.