Verizon sees Apple Watch-fueled growth amid early ‘5G launch’
Verizon’s last few weeks brought dramatic highs and lows.
After taking preorders last month, Verizon kicked off October with the launch of its Verizon 5G Home broadband-replacement service, which it argues made it the first to the next-generation wireless technology (rivals would debate this point). But over the last two weeks, Verizon has had to deal with another challenge: recovering from the devastation of Hurricane Michael.
Verizon, more than other carriers, suffered outages resulting from cleanup crews cutting the critical fiber lines carrying data. The company on Monday said that wireless services are back up and running, but warned people not to cut those fiber-optic lines.
The storm put Verizon, which prides itself on network quality and reliability, in a difficult position as it struggled to deal with the outages throughout the Panhandle region of Florida. Amid all this, Verizon on Tuesday posted better-than-expected earnings that showed a jump in customer growth in the third quarter. A bright spot in the results was the increase in the connection of wearable devices.
Because the 5G service launch and Hurricane Michael both hit in October, their impact wasn’t felt in the last quarter, which wrapped up at the end of September.
Verizon’s 5G launch will likely have a negligible effect on its overall numbers for the next few quarters because of the limited scale of the commercial deployment, but that didn’t stop the company from touting the moment in its release. There’s a global race to get to 5G, and Verizon got there first by using a proprietary variant of the industry-standard 5G, which rivals say shouldn’t be counted as 5G.
‘With the beginning of the 5G era in this fourth quarter,’ Verizon CEO Hans Vestberg said in a statement on Tuesday, ‘we are investing in networks, creating platforms to add value for customers and maintaining a focused, disciplined strategy.’
The marker gives the carrier bragging rights about network quality at a time when consumers are starting to question their choice of wireless providers. The company hopes to reinforce its reputation for network quality by jumping to the next generation first.
The Apple Watch connection
For the third quarter, Verizon said it added a net 515,000 retail postpaid customers, or people who pay their bills at the end of the month and generally boast better credit scores. The gains were driven by 295,000 net phone gains and 300,000 wearables, which are most likely connected Apple Watches.
The success of its smartwatch business led Verizon to look into another wireless accessory in the phone-that’s-not-a-phone Palm mobile companion device.
Verizon added 54,000 Fios internet customers, but lost 63,000 Fios video subscribers. Its Oath media business, consisting of older AOL and Yahoo properties, saw a decline in revenue in the quarter, and Verizon warned that the business wouldn’t meet its previous target of $10 billion in revenue by 2020.
Overall, Verizon posted a third-quarter profit of $5.06 billion, or $1.19 a share, compared with a year-earlier gain of $3.74 billion, or 89 cents a share. Excluding one-time items, it posted earnings of $1.22 a share, or 3 cents above Wall Street’s forecast.
Revenue rose 2.8 percent to $32.6 billion.
Verizon shares fell 8 cents to $54.90 in premarket trading.