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Why Verizon’s Wireless Service Revenue Keeps Falling

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Verizon’s wireless service revenue

There are two significant components of Verizon Communications’ (VZ) wireless revenue. The bigger part is the company’s wireless service revenue, and the smaller part is its wireless equipment revenue. The declining trend in the company’s wireless service revenue continued in 1Q17.

During the MoffettNathanson Media & Communications Summit held on May 17, 2017, Matthew Ellis, Verizon’s executive vice president and CFO (chief financial officer) commented on this. He indicated that the 2Q17 results would continue to show ongoing wireless service revenue pressure, which should show gradual improvement in the second half of 2017. Further, management provided some of the key drivers of its service revenues. Ellis stated, “The headwinds in both the line access and the overage will start to reduce as again for the back half of the year.”

In 1Q17, Verizon reported wireless service revenue of $15.8 billion, a ~6.1% fall YoY (year-over-year). The fall was due to reduced overage revenue and pricing plan optimization primarily by single-line users after the introduction of unlimited offerings.

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Performance of other significant US wireless carriers in 1Q17

Now let’s look at the growth in wireless service revenue of the other major US wireless players in 1Q17. T-Mobile’s (TMUS) service revenue rose ~11.4% YoY to reach ~$7.3 billion in 1Q17. AT&T’s (T) wireless service revenue from its domestic operations fell ~1.8% YoY to ~$14.5 billion in 1Q17. During the same quarter, Sprint’s (S) service revenue from the wireless component fell ~6.7% YoY to reach $5.7 billion. T-Mobile grew the most among its peers.

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