Verizon posts sequential growth in service revenue in 4Q17
Verizon Communications’ (VZ) total wireless services revenues have increased for the second-straight quarter in 4Q17 on a sequential basis. In 4Q17, its wireless service revenues stood at approximately $15.9 billion, up from the sequential revenue of $15.8 billion in 3Q17. However, its service revenues declined 2.9% on a YoY basis in 4Q17.
About 80% of postpaid phone customers were on unsubsidized pricing plans at the end of 2017, compared with 67% in 2016. Notably, the increase in penetration of unsubsidized plans has helped Verizon return to service revenues growth. Verizon’s management noted that wireless service revenue year-over-year growth is expected to arrive by mid-2018.
Improving EBITDA margin
Verizon’s adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) for its Wireless segment reached $9.5 billion in 4Q17. The segment’s EBITDA margin was 39.8% in 4Q17, up from 36.9% in 4Q16.
This improvement in Verizon’s Wireless segment’s EBITDA margin was primarily driven by a sequential increase in wireless service revenues and strong subscriber growth.
Strong subscriber growth and retention rate
In 4Q17, Verizon added a total of 1.2 million in net retail postpaid connections, of which net phone additions came to 431,000, while tablets and other connected devices additions came to 193,000 and 550,000, respectively.
Meanwhile, peers T-Mobile (TMUS) and Sprint (S) reported postpaid phone net additions of 891,000 and 184,000, respectively, in their latest reporting quarters. AT&T (T) gained 329,000 postpaid phone customers in its latest quarter.
Verizon’s total retail postpaid churn rate improved ten basis points to 1.0% in 4Q17, mainly driven by consistently a low retail postpaid phone churn rate. In fact, the company has managed to produce retail postpaid phone churn of less than 0.90% over the past 11 quarters, with the recent quarter’s churn rate coming in at 0.77%.
In the next part of this series, we’ll take a look at Verizon’s Fios.