- Total wireless service revenue increased to $18.8 billion, up 10.0% year-over-year primarily driven by increases in administrative fees
- Wireless retail postpaid phone churn rate rises to 0.92% from 0.74% in Q3 2022
- Strong Net Business Additions and FWA Growth Bright Spots for Verizon in Q4 2022
Verizon had a good quarter in terms of revenue growth
- Total wireless service revenue increased to $18.8 billion, a 10.0% year-over-year increase primarily driven by administrative fee increases that took effect in June 2022. Postpaid wireless consumer customers saw an increase in administrative fees from $1.35 per voice line to $3.30. For businesses, the charge amount is $2.20 per month per line for each smartphone and data device, and $0.98 per month per line for each feature phone and tablet device. This was called the “Economic Adjustment Charge”.
- Business wireless service revenues grew 5.7% year over year. Verizon continues to lead in business subscribers, holding more than 45% of B2B wireless subscribers. Revenue growth was attributed to strong commercial subscriber uptake, up 5.5% year-over-year, now at 17.8 million postpaid retail wireless subscribers.
- Equipment revenue also grew to $6.6 billion, up 22.9% from a year earlier on the back of a stronger refresh rate of 4.7%, up 0.4 basis points a year. Promotions of new Samsung foldable devices and the latest iPhone 14 helped achieve this higher refresh rate. According to preliminary estimates for the third quarter of 2022 from Counterpoint’s US Channel Engagement TrackerVerizon’s share of smartphone sales $800 and up was more than 60%, compared to less than 40% in the third quarter of 2021.
Wireless retail postpaid phone churn rate rises to 0.92% from 0.74% in Q3 2022
- As expected, due to the economic adjustment charge, Verizon posted consumer postpaid phone churn of 0.88% and business postpaid phone churn of 1.10%. Both increased year over year, but the consumer segment saw stronger increases.
- Higher churn saw net additions also fall to just 8,000 postpaid phone subscriber additions in the third quarter, as the consumer segment saw a loss of 189,000 postpaid phone subscribers, while the business segment saw 197,000 postpaid phone subscriber additions. postpaid phone subscribers.
Source: Verizon Earnings Statements
Business growth is a bright spot for Verizon
- Business revenue and subscriber growth have helped Verizon weather the current headwinds well. Unlike the consumer segment, businesses tend to have fewer provider options, making it difficult to switch. This has benefited Verizon on the business side. The increase in administrative fees had a greater (negative) effect on the consumer side.
- Verizon sees continued positive momentum for its business segments in government, enterprise and SMB due to the need for greater mobility among the workforce. Work-from-home trends have helped Verizon during the times of COVID-19, but how long this trend will continue in the long term remains to be seen.
Fixed wireless access momentum continues with 342,000 net additions in Q3 2022
- Consumer FWA net additions were 234,000 while business FWAs F.W.A. contributed 108,000 net additions.
- There are now more than 40 million homes covered by Verizon’s fixed wireless network in the third quarter of 2022, including more than 30 million homes covered by mmWave 5G, called 5G Ultra Wideband.
- Verizon also launched FWA on prepaid through Straight Talk in the third quarter. Straight Talk Home Internet is a new service that uses Verizon’s LTE and 5G networks for $45 a month with promised download speeds between 20 and 100 Mbps. home internet router it has a one-time charge of $99.99 and is available at Walmart.
Prepaid segment saw the first positive Tracfone net additions since the first quarter of 2021
- Prepaid obtained a gain of 39,000 net additions in the quarter, 34,000 of them from tracfone brands There are now 23.1 million prepaid connections.
- In addition to launching a prepaid FWA program, Verizon has also launched a new prepaid brand called Total by Verizon. This will sit between Tracfone’s low-end value offering and high-end postpaid services to give consumers a high-end value option.
C-band 5G build is faster and better than expected
- Verizon is well on track to hit 175 million POPs by the end of the year, having eclipsed 160 million in the third quarter. It also expects to reach 200 million in the first quarter of 2023.
- In the third quarter of 2022, almost 53% of its postpaid mobile customers had 5G Compatible Devices. According to the US Channel Share Tracker, more than 90% of sales made in Q3 were 5G-capable phones compared to 70% in Q3 2021.
- In terms of guidance on deployment expenses for the company’s C-band 5G network, Verizon continues to expect to spend between $5 billion and $6 billion in 2022.
Outlook for the fourth quarter of 2022 and full year 2022
- Verizon’s overall guidance for 2022 has remained the same with wireless revenue growth projected at 8.5% to 9.5%.
- In the fourth quarter, you will need to manage the increased turnover, especially in the consumer segment. New iPhone 14 sales and promotions will help with this, as well as improved network infrastructure through its C-band implementations.
- FWA and business momentum is likely to continue, especially with FWA expanding to more segments and the current work-from-home climate.
- Verizon announced an organizational restructuring with the goal of cutting $3 billion in costs. AT&T it has also begun cutting costs, which included nearly 3,000 jobs.