Verizon Communications Inc VZ.N , the No. 1 USA wireless carrier, reported a 20 percent fall in quarterly profit as it lost wireless postpaid subscribers despite the re-launch of unlimited data plans. T-Mobile and Sprint have been trumpeting their cheaper unlimited plans. That compares with 640,000 retail postpaid net additions in the year-ago period, including 8,000 phone losses.
Both the wireless and wireline businesses are under pressure, underscoring why the company is openly interested in merger and acquisition possibilities as avenues for growth.
Do wireless customers really care about unlimited data on their cellphone plans? Verizon said it would have lost even more customers if it hadn't launched the unlimited plan.
Wells Fargo analyst Jennifer Fritzsche expects that the company's subscriber growth numbers improved a bit since its unlimited plans became available, though her research suggests "a low volume quarter industry-wide".
Wireless revenues were $20.9bn, down 5 per cent year-over-year.
". we extended our wireless and fiber network capabilities, began offering an unlimited pricing option and expanded our opportunities in new markets", Verizon Chief Executive Lowell McAdam said in a statement, commenting on the latest quarter.
Verizon has explored smaller as well as bigger deals, though nothing has worked out for the company. A net decline of 307,000 retail postpaid connections in first-quarter 2017 included 289,000 phone losses.
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Capital expenditures totalled $3.1 billion in first-quarter 2017, as Verizon carried on spending on its network.
Meanwhile, Verizon's main competitor AT&T Inc T.N plans to diversify its business through an $85.4 billion acquisition of Time Warner Inc TWX.N , which would give it control of cable TV channels like HBO and other coveted media assets.
According to Thomson Reuters I/B/E/S, analysts had expected adjusted earnings per share of 99 cents and revenue of $30.77 billion. But Verizon doubled down in 2014 with its $130 billion purchase of Vodafone Group PLC's 45% stake in their Verizon Wireless joint venture. The telecom company said it added a net of 35,000 Fios internet connections, missing quarterly estimates, and it lost a net of 13,000 Fios video connections for the period.
Shares of Verizon fell 53 cents, or 1 percent, to close Thursday at $48.41.
"We're confident in executing our strategy organically, but if there's the right opportunity out there to accelerate the strategy inorganically in a way that adds holder value, we're always looking at those opportunities", said Verizon Chief Financial Officer Matt Ellis on a call with analysts.
This year, the wireless major hopes to see improvements in its wireless service revenue with total revenue "fairly consistent" with 2016.