EUR 850.00 For Business Accounts Only

Morningstar | Verizon Posts Strong Initial 4Q Wireless Numbers

Speaking at an investor conference Jan. 8, Verizon disclosed that it added 1.2 million net new postpaid wireless customers during the fourth quarter, including 650,000 postpaid phone net additions with monthly postpaid phone customer churn of 0.82%. That phone figure is the strongest in four years, despite a continued gradual increase in the pace of customer defections seen throughout 2018. Verizon shares are up nearly 3% on this announcement; we don’t plan to change our fair value estimate, leaving the stock roughly fairly valued. We continue to view Verizon as a narrow-moat firm thanks to the scale and strength of its wireless business.

The wireless industry has seen the pace of postpaid phone customer growth accelerate, a trend that Verizon Wireless CEO Ronan Dunne ascribed to increased engagement through things like wearable technology, migration from prepaid plans, and increasing penetration at both ends of the customer age spectrum. Offsetting this trend, however, both Comcast and Charter are now marketing their wireless services and are taking retail market share. Dunne indicated that Verizon is losing less than its fair share of customers to these entrants, who also use the Verizon network to serve their customers. We suspect Verizon’s phone customer additions roughly matched T-Mobile’s during the quarter, with Sprint and AT&T struggling to expand their respective customer bases.

Verizon also provided an update on its 5G trials, claiming that customers are receiving nearly 1 gigabit-per-second speeds (versus promised 300 megabits per second) using only 40% of the firm’s available millimeter wave spectrum. While interesting, we’re hesitant to draw any conclusions given the early stage of this effort. It will take time for the networks to fill with customers and truly be put to the test.