Verizon loses 289K postpaid phone subs in Q1, misses 'on almost every metric'

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Total consolidated operating revenues came in at $29.8 billion.

Shares of Verizon slipped after it posted a net loss of 289,000 postpaid phone customers during the first quarter. But things would have been much worse for the nation’s largest carrier if it hadn’t joined the unlimited bandwagon.

Verizon finally launched an unlimited data plan in mid-February, joining its rivals and reversing course after years of decrying the wisdom of offering all-you-can-eat on a high-speed wireless network. The company had been on pace to lose nearly 400,000 customers during the quarter, CFO Matt Ellis said this morning, but the new plan helped the company stanch the bleeding.

“You saw an immediate impact on our business” with the launch of unlimited data, Ellis said during Verizon’s first-quarter earnings call. “The change we saw in the first quarter between the 398 (thousand) negative in the first half (of the quarter) and then the positive 109 (thousand) in the second half was all about unlimited as opposed to any seasonability.”

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That mid-quarter turnaround notwithstanding, analysts and investors generally viewed Verizon’s first quarter as a disappointment, and shares sank more than 2% after earnings were released. Here’s a closer look at some of Verizon’s key quarterly metrics:

Subscribers: Verizon saw an overall net decline of 307,000 retail postpaid customers during the quarter, and its 289,000 net postpaid phone losses were far worse than the loss of 100,000 customers predicted by Wells Fargo Securities. Overall retail prepaid connections grew .5% year over year to 5.4 million.

Financials: Total consolidated operating revenues came in at $29.8 billion, marking a 7.3% year-over-year decrease and falling shy of Wells Fargo’s estimate of $29.9 billion. Total wireless revenue of $20.9 billion was short of the $21.1 billion predicted by Wells Fargo, and wireless service revenue of $15.8 billion was down 6.1% year over year, missing Wells Fargo’s estimate of $16 billion.

Media: Verizon’s media business, led by AOL, “delivered solid seasonal performance” during the quarter, Verizon said. Revenue net of traffic acquisition costs was down roughly 4%, however, due to a higher percentage of programmatic advertising.

The IoT: Total telematics revenues came in at $214 million, helping to drive a 17% year-over-year increase in Verizon’s IoT business.

Summary: Verizon continues to struggle in a brutally competitive U.S. wireless market, and its network—while still superior, according to third-party studies—isn’t the differentiating factor it once was. The carrier will soon bring Yahoo into the fold, expanding its digital media and advertising empire, and speculation is rampant that it could merge with a larger media or cable company. Its core wireless business, though, continues to struggle.

“Verizon missed. On almost every metric,” Craig Moffett of MoffettNathanson wrote in a note to investors. “They missed on financial metrics (earnings missed by a penny). They missed on revenue. They missed on ARPU. They missed on wireless margins. They missed on wireline. There are few silver linings here."