Verizon's Adding Subscribers, but Not Profits
A lot of people signed up for Verizon's (NYSE: VZ) wireless phone service in the fourth quarter. The telecom giant added another 790,000 postpaid phone subscribers, its best Q4 performance in six years, as a result of strong gross additions and best-in-industry churn rates.
Verizon's ability to attract subscribers seems to rely heavily on pricing and promotions. While its revenue came in above expectations, its earnings fell below the consensus. The main culprit may be Verizon's moves to lower its pricing on unlimited plans and offer its customers a free year of Disney's (NYSE: DIS) Disney+ streaming service. Average revenue per account fell sequentially and EBITDA margin contracted across both the consumer and business segments. EBITDA declined 1.2% in its consumer segment compared to growing EBITDA at its competitors like AT&T (NYSE: T) and T-Mobile (NASDAQ: TMUS).
Verizon's lower profitability despite its strong subscriber growth is something investors need to pay attention to.
Source Fool.com
