Verizon on Friday reported 173,000 wireless postpaid phone net additions for the second quarter, as the COVID-19 pandemic weighed on wireless service and equipment revenue.
The postpaid phone additions include 97,000 in Verizon’s consumer segment and 76,000 in its business segment. Verizon added 12,000 prepaid accounts.
Total wireless service revenue was down 1.7% from the same period a year ago, to $15.9 billion, while postpaid phone churn for Q2 was 0.51%. Verizon cited a significant drop in wireless equipment revenue because of low activations as the main driver behind a 4% drop in total consumer revenues to $21.1 billion and business to $7.5 billion.
Verizon temporarily shuttered many of its company-owned retail stores in response to the pandemic. With limited store activity and device activations, consumer equipment revenue was down 17.8% year over year to $3.2 billion. Total wireless equipment revenue was $3.8 billion, with an upgrade rate 3.7%.
During the second quarter, Verizon started reopening stores with more than 60% of company-owned retail stores operating at the end of June. The carrier has introduced curbside pick-up and is adopting a new touch-less retail strategy as part of its enhanced safety measures.
Consumer wireless service revenue also took a hit from COVID-19, declining 2.7% from the year ago period to $13.1 billion. Like AT&T, which reported earnings yesterday, Verizon said the results include impacts from reduced roaming and usage as travel remains restricted, and waived fees. However, Verizon said it had record uptake of its premium Unlimited plans by new accounts. Wireless postpaid average service revenue per account (ARPA) declined 1.8% to $116.02.
Going forward in the third quarter, Verizon expects wireless revenue in a range of -1% to flat year over year.
The carrier is continuing to densify and build its 5G network, with $9.9 billion in capital expenditures in the first half of the year. Those investments supported capacity and traffic growth across Verizon’s networks and included additional fiber and cell sites to expand its 5G UltraWideband rollout, which primarily uses 28 GHz millimeter wave spectrum.
Verizon 5G network is in parts of 35 cities, while its fixed wireless 5G Home product is currently in six markets.
Verizon previously announced a $10 billion cost savings initiative. So far it has saved $7.2 billion and is on track to meet its year-end 2021 target.
"Through extraordinary circumstances, Verizon delivered a strong operational performance in the second quarter," said Verizon CEO Hans Vestberg in a statement. "We remain focused on our strategic direction as a technology leader, quickly adapting to the new environment and providing our customers with reliable and vital connections and technology services, while working to keep our employees safe and accelerating our 5G network deployment. We have embraced, engaged in and responded to important social movements happening throughout the world, and will continue to be at the forefront of initiatives that move the world forward for everyone. We are proud of what we have done, and continue to do, for our customers, shareholders, employees, and society."
Other Q2 metrics:
- Verizon reported total revenue of $30.4 billion, down 5.1%
- Adjusted EBITDA of $11.5 billion and adjusted EBITDA margin of 37.9%
- Earnings per share of $1.18, down 4.1%
- Verizon Media revenues were down 24.5% to $1.4 billion