Verizon Communications reported a miss in its quarterly revenue estimates on Monday, driven by a decline in phone upgrades and a significant drop in prepaid wireless subscribers. The company’s shares fell over 6% following the announcement.
In the second quarter, Verizon’s consumer business lost 624,000 wireless retail prepaid subscribers, a decline attributed largely to the Affordable Connectivity Program (ACP) expiration in May. The ACP had provided internet subsidies to 23 million households in the U.S. who could not afford connectivity otherwise.
The end of the ACP has led to concerns across the telecom industry, affecting other major players like AT&T, T-Mobile US, Charter Communications, and Comcast, whose shares also declined between 1.3% and 3%.
Analyst Craig Moffett from MoffettNathanson noted that the market’s reaction suggests a greater-than-expected negative impact from the ACP’s conclusion, affecting relative pricing and exposure, particularly for cable operators.
Verizon’s second-quarter revenue stood at $32.8 billion, falling short of the $33.06 billion estimated by LSEG. The company faced challenges due to a historically low number of phone upgrades during the period.
Despite these setbacks, there were some positive indicators. During a post-earnings call, Verizon’s Chief Financial Officer, Tony Skiadas, mentioned that most disconnections related to the ACP’s end had already occurred, suggesting a reduced impact in the next quarter.
Analysts anticipate a potential increase in phone upgrade activity later this year, coinciding with Apple’s latest iPhones, which are expected to feature new artificial intelligence (AI) capabilities. Additionally, Verizon’s myPlan, introduced in May last year, is gaining customer traction.
This flexible plan allows customers to pay only for the services they need. From April to June, it helped Verizon add 148,000 net monthly bill-paying wireless phone subscribers, surpassing Visible Alpha’s estimated 127,870 additions. This was a positive turnaround from the previous quarter when Verizon had lost 68,000 subscribers.
Tony Boyce is a seasoned journalist and editor at Sharks Magazine, where his expertise in business and startups journalism shines through his compelling storytelling and in-depth analysis. With 12 years of experience navigating the intricate world of entrepreneurship and business news, Tony has become a trusted voice for readers seeking insights into the latest trends, strategies, and success stories.