Verizon grew wireless subscribers and service revenue in the second quarter while it stepped customers into higher tier unlimited plans, leading to upped expectations for 2021.
For Q2 Verizon reported 528,000 postpaid net wireless additions, including 275,000 net phone additions. The carrier ended June with 121.3 million total retail connections.
Of the postpaid net phone additions, 197,000 were consumer and the remaining 78,000 were in its business segment.
It was an improvement from the first quarter, when Verizon lost 178,000 total postpaid net phone subscribers. In Q2 2020 Verizon added 173,000 but saw the pandemic weigh on both service and equipment revenue.
Total postpaid churn was 0.94% in Q2and postpaid phone churn was 0.72%. Verizon said consumer postpaid phone churn of 0.65% was a record-low – other than the second and third quarter of 2020, when carriers saw very low switching activity with impacts from Covid-19
Verizon’s corporate-owned retail stores were operating fully in the latest quarter, after stores had closed or reduced hours in 2020 related to Covid-19. Consumer activity was back to normal levels and the carrier said it timed promotions to align with economic recovery. Customers getting aboard with 5G helped boost the quarter, with about 20% of its consumer wireless base equipped with 5G-capable phones at the end of Q2.
The first half of the year saw Verizon spend $8.7 billion, including more than $160 million of capex related to C-band for 5G. It still expects capital spending on C-band between $2 billion and $3 billion in 2021.
"We are executing on our multipurpose network strategy and producing positive results in each of our five growth vectors, recording strong second quarter results. With more connections on our network than anyone else, our already excellent network performance improved in the quarter and was recognized by RootMetrics as the best overall network performance for the 16th time in a row," said Verizon Chairman and CEO Hans Vestberg in a statement, adding that it’s on track to close both its acquisition of TracFone and the $5 billion sale of Verizon Media division.
Verizon added 18,000 prepaid customers in Q2 and the TracFone deal would boost its prepaid base by roughly 21 million.
In a note to investors last week, Wells Fargo analysts expected Verizon to a greater share of subscribers than it did in the first quarter, in part thanks to handset deals.
“We expect Verizon to take a much bigger share of the postpaid phone net additions pie compared to Q1'21 as they got more aggressive by extending their most aggressive phone subsidy (up to $700 off an iPhone 12 with a valid trade-in) to existing customers in Q2,” wrote the Wells Fargo team in a July 15 note.
Verizon introduced new promotions at the beginning of June, aimed at attracting new and existing customers and getting more 5G devices in subscribers hands ahead of C-band deployments later this year.
As Verizon reported more customers taking on higher value premium unlimited plans, it brought in more money per subscriber, with consumer postpaid average revenue per account (ARPA) up 4.5% to $121.40.
Total wireless service revenue was up 5.9% year over year (or 4% from Q2 2019) to $16.9 billion. Consumer wireless accounts for the lion’s share at $13.8 billion, which Verizon attributed to growing its customer base, continued adoption of unlimited and premium plans and products like billed content.
The wireless side of its business segment saw double-digit service growth since the same quarter in 2019, up 11.4% to $3.1 billion – up 8% over the second quarter last year. That was driven largely by small and medium business, with slight gains in the public sector.
Verizon also made more money selling devices, with total wireless equipment revenue of $5.54 billion and an upgrade rate of 4.6%.
Verizon CFO Matt Ellis said in a statement that Verizon had strong performance financially and operationally in the first half, and now expects to grow wireless service revenue between 3.5 and 4% for the full year 2021 – up from previous guidance of 3%. It also upped the 2021 outlook for adjusted earnings per share (EPS), now $5.25 to $5.35.