Verizon adds 1.5 million new monthly users; revenue beats estimates

Thu Jan 21, 2016 11:16am EST
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By Malathi Nayak and Kshitiz Goliya

(Reuters) - Verizon Communications Inc on Thursday reported higher-than-expected revenue for the fourth quarter as heavy promotions helped it counter aggressive offers and discounts from rivals and win new users.

Shares of the No. 1 U.S. wireless phone service provider, whose profit edged past analysts' estimates, rose 2.7 percent to $45.63 in morning trading.

Verizon added a net 1.5 million wireless retail postpaid, or monthly, subscriptions in the quarter, below 2 million a year earlier but above the analysts' average estimate of 1.42 million, according to market research firm FactSet StreetAccount.

The company, known for its high-quality network, withstood stiff competition from rivals in the saturated U.S. wireless market. Smaller rival Sprint Corp offered 50 percent off to encourage users to switch to its network, and T-Mobile US Inc launched a free video streaming plan.

For its part, Verizon rolled out holiday season offers such as a data giveaway on some plans, $100 discounts on certain phones and a $300 credit to trade in some models.

Customer defections, or churn, in Verizon's postpaid business fell to 0.96 percent from 1.14 percent a year earlier.

Average revenue per account, however, fell 6.6 percent to $148.30, below the analysts' forecast of $149.61, according to FactSet. Jefferies analyst Mike McCormack said Verizon must curb such declines in this measure this year.

Like its rivals, Verizon has switched from offering customers two-year contracts to monthly installment plans that have lower service fees and can weigh on revenue.   Continued...

An advertisement for Verizon is seen at Times Square in New York, May 12, 2015.  REUTERS/Shannon Stapleton