YOU ARE AT:CarriersVerizon growth slows, though churn and revenues improve

Verizon growth slows, though churn and revenues improve

Verizon connection growth slows, though tablets bolster postpaid position

Verizon Wireless posted fourth quarter and full year financial results showing a continued slowdown in overall customer growth, though it looks to be on track to lead the industry in the lucrative postpaid segment.

Verizon Wireless said it added nearly 1.4 million “retail” customers during the fourth quarter, which was down a significant 34.1% compared to the same quarter in 2014. The latest results included 1.5 million postpaid net additions, which was down 23.5% year-over-year, and a loss of 157,000 prepaid customers compared with a gain of 81,000 prepaid customers in 2014.

Tablets continue to be the driving force for Verizon Wireless’ growth, as the device segment tallied 960,000 net additions for Q4. Smartphones, which generate higher monthly service revenues, witnessed 713,000 net additions, though was offset by a net decline in basic phones.

For the full year, Verizon Wireless said it added nearly 4 million retail customers, which was down 29% from 2014. All of its 2015 growth was from the postpaid side of its business, which posted 4.5 million net additions while its prepaid business lost 551,000 customers for the full year.

Verizon Wireless’ Q4 postpaid numbers managed to outgrow smaller rival T-Mobile US, which earlier this month said it added 1.29 million postpaid connections during the quarter. However, T-Mobile US did note its postpaid growth was dominated by handsets and it added 2.1 million total connection additions for the quarter.

Verizon Wireless ended 2015 with 112.1 million total direct connections, with the carrier still not reporting connection numbers from its wholesale or “Internet of Things” operations.

While overall growth was down year-over-year, Verizon Wireless did make progress in trimming customer churn. For Q4, churn dropped from 1.39% in 2014 to 1.23% last year, while full year churn dropped from 1.33% in 2014 to 1.24% last year.

Wireless operating revenues increased 1.2% year-over-year for Q4 to $23.7 billion, highlighted by a 27.9% increase in equipment revenues offsetting a 5.6% drop in service revenues. For the full year, revenues increased 4.6% to $91.7 billion, with service revenues down 3.1% and equipment revenues increasing 54.4%. This discrepancy was expected as Verizon Wireless swapped lower monthly service rates for customers paying full price for their devices.

Expenses were a mixed bag, as Q4 expenses dropped 5.6% year-over-year, while full year operating expenses increased 1.3%. The net result was a 23.6% increase in Q4 operating income to $6.8 billion, while full year operating income increased a more modest 12% to $30 billion.

Year-over-year LTE data traffic increased 60% during Q4, with 90% of the carrier’s overall data traffic running over its LTE network by the end of last year.

Verizon Wireless is also seeing growing interest in phone payments, with the percentage of device activations taking the monthly installment approach surging from 58% during the third quarter to 67% in Q4, which was slightly below expectations. The carrier said it expects that number to top 70% in the current quarter.

Wireless-specific capital expense increased 11.4% for the full year to $11.7 billion in 2015. Verizon management noted it was continuing to focus more on small cell deployments at the expense of adding fewer macro sites.

Bored? Why not follow me on Twitter

ABOUT AUTHOR