VZW Posts Solid 2Q with Postpaid Tablets Leading Way
Verizon Wireless service revenues grew 7.5 percent over last year to $21.5 percent, with EBITDA of $9.1 billion, up 6.8 percent over the same quarter last year.
As CEO Lowell McAdam mentioned earlier this month in an interview, Verizon Wireless added 1.4 million postpaid subscribers. Overall, Verizon increased its retail connections to 104.6 million, with 98.6 million retail postpaid connections, 4.5 percent increase over the same quarter last year.
When broken out, it was tablets that ruled the quarter. The company added 304,000 postpaid phone net additions and 1.15 million postpaid tablets. At the end of the quarter, smartphones accounted for nearly 75 percent of retail postpaid customer phone base, up from 72 percent in first-quarter 2014. This was also the third straight quarter of company-record net additions for tablets.
Retail postpaid churn was .94 percent in the second quarter, down 13 basis points sequentially and up 1 basis point year over year. Retail churn was 1.25 percent in the second quarter, down 12 basis points sequentially and up 2 basis points year over year.
Migrations to the company’s More Everything plans continued to increase, up 55 percent sequentially, with 2.8 connections per account. Fully 90 percent of all upgrades were smartphones, with about 76 percent of all total data traffic currently running over LTE.
Overall, Verizon’s consolidated results beat analyst estimates with $1.01 earning per share on $31.5 billion in total revenues. Those earnings took into account an after-tax gain of $434 million, or 10 cents per share, related to the sale of 700 MHz A Block spectrum licenses.
In an earnings call Tuesday morning, Verizon CFO Fran Shammo said that the company’s rebound in account growth was was driven by customer choice, with Verizon allowing people to select either a device subsidy or the company’s Edge device financing plan.
Shammo also highlighted the rise of tablets as a good thing because they’re low subsidy and use lots of data. “Tablets are extremely good for the industry, not just for Verizon,” Shammo said.
Verizon continues to target 2014 investments in the range of $16.5 billion to $17 billion, with a decrease in capital spending as a percentage of total revenues for the full year. Verizon stuck with a target of for consolidated top-line growth of 4 percent and adjusted consolidated EBITDA margin expansion in 2014.
Shares of Verizon were trading nearly flat in pre-market at $50.70, as of 7:06 a.m. CST.