(Bloomberg) -- Verizon Communications Inc. posted disappointing subscriber gains for the first quarter after losing phone and tablet customers, a concern for investors as the company narrows its focus on wireless services.
Total wireless subscriber numbers increased by 61,000, as a loss of 44,000 phone customers was offset by increases in hotspots and other connected devices. The total gain was much lower than the 207,000 analysts expected. The shares dropped as much as 3.6 percent.
Unlike rivals such as T-Mobile US Inc. and AT&T Inc., Verizon didn’t push a lot of price promotions and phone giveaways during the quarter. The willingness to stand down in the face of aggressive competition may explain the sluggish subscriber growth.New CEO Hans Vestberg, who joined in August after decades working at network-equipment maker Ericsson AB, has shrunk investments in areas like media to fully focus on network expansion, particularly toward fifth-generation or 5G technology.Verizon took an early lead in the race to 5G, becoming the first carrier to sell 5G phones in parts of Chicago and Minneapolis. But the services won’t start adding to the telecom company’s growth until 2020, according to Bloomberg Intelligence. That’s when more handsets, including iPhones, are expected to become available. On an earnings conference call Tuesday, management didn’t provide much details on the launch. “Verizon shares are being pressured by several factors including the phone subscriber miss, and a difficulty in detailing their 5G progress and outlook,” said Kevin Roe, an analyst at Roe Equity Research LLC.Verizon did raise its profit forecast for the year, which helps validate Vestberg’s big bet on wireless services.
The shares were down 3.2 percent to $56.53 at 10:41 a.m. in New York on Tuesday. After the drop, they’re still up 9.4 percent since Vestberg took over, outpacing AT&T and the S&P 500 Index.
Earnings were $1.20 a share last quarter, excluding some items, while analysts anticipated $1.17 on average. Sales were in line with forecasts. Verizon now expects full-year earnings per share, excluding special items, to increase in the low-single-digit range. Previously the company saw no growth for 2019.For details, see here.Read company’s statement here.
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