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Why Did Verizon’s Wireless Service Revenue Fall?

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Verizon’s wireless service revenue

Let us look at the two important segments of Verizon’s (VZ) wireless revenue. The smaller part is the company’s wireless equipment revenue, whereas the larger part is its wireless service revenue. The declining trend in the wireless component’s service revenue continued during 2Q17.

In 2Q17, Verizon reported wireless service revenue of $15.6 billion, a 6.7% reduction year-over-year (or YoY). This fall in wireless service revenue is mainly due to the lost overage revenue and pricing plan optimization mainly by single-line subscribers after the introduction of unlimited offerings.

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About 75% of postpaid phone users are now on an unsubsidized pricing plan, as compared with 71% in 1Q17. As the penetration of unsubsidized plans increases, it will help Verizon improve the service revenue fall. Verizon’s management anticipates wireless service revenue growth to stay negative in 2017 with positive growth beginning in 2018.

Performance of other US wireless carriers in 2Q17

Now let us assess the growth in wireless service revenue of the other US wireless giants in 2Q17. Sprint’s (S) wireless service revenue declined ~6.2% YoY to reach $5.7 billion, whereas T-Mobile’s (TMUS) wireless service revenue increased by ~8.1% YoY to reach $7.4 billion. Meanwhile, AT&T’s (T) wireless service revenue from its domestic operations decreased by ~2.5% YoY to reach $14.5 billion.

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