25 Jul

What to Expect for Verizon’s Wireless Service Revenue in 2Q17

WRITTEN BY Ambrish Shah

Verizon’s wireless service revenue

Let’s take a look at the two important components of Verizon’s (VZ) wireless revenue. The smaller part is the company’s wireless equipment revenue, and the bigger part is its wireless service revenue. Wall Street anticipates Verizon’s wireless service revenues to accelerate their decline in 2Q17 to ~7.2% YoY (year-over-year).

What to Expect for Verizon’s Wireless Service Revenue in 2Q17

Earlier in 1Q17, Verizon reported wireless service revenue of $15.8 billion, a 6.1% fall YoY. This decline in wireless service revenue is because of the reduction in overage revenue and pricing plan optimization, mainly from single-line subscribers after the launch of the unlimited offerings.

About 71% of postpaid phone subscribers are now on an unsubsidized pricing plan, compared with 67% in 4Q16. As the penetration of unsubsidized plans increases, it should help Verizon improve the service revenue decline. Verizon’s management anticipates its wireless service revenue growth to stay negative in 2017, with positive growth starting in 2018.

Performance of other US wireless carriers in 1Q17

Now let’s evaluate the growth in wireless service revenue for the other major US wireless behemoths in calendar 1Q17. Sprint’s (S) wireless service revenue fell ~6.7% YoY to reach $5.7 billion, whereas T-Mobile’s (TMUS) wireless service revenue rose ~11.4% YoY to reach $7.3 billion. Meanwhile, AT&T’s (T) wireless service revenue from its domestic operations fell ~1.8% YoY to reach $14.5 billion.

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