uploads/2018/08/smartphone-1894723_1920.jpg

Could Competition Hurt Verizon in the Future?

By

Updated

Fierce competition among telecoms

In the second quarter, Verizon (VZ) grew wireless service revenue YoY (year-over-year) for the first time since 2014. However, the US wireless market continues to be competitive. That’s mainly because the two top cable operators, Charter Communications (CHTR) and Comcast (CMCSA), have launched their own wireless operations with the help of Verizon’s infrastructure.

In addition, On August 15, T-Mobile (TMUS) introduced an Un-carrier service called Team of Experts. It will reinvent the subscriber experience by putting people first in place of automated phone menus and robots to attend to subscriber complaints. There’s also an upcoming iPhone cycle, which could intensify competition among US national wireless service providers.

Article continues below advertisement

Verizon’s wireless service revenue

Verizon reported wireless service revenue of $15.8 billion in the second quarter, up ~0.8% YoY (year-over-year). However, excluding the impact of the adoption of the new revenue recognition accounting standard, the company posted wireless service revenue of $16 billion in the second quarter, up 2.5% YoY.

Approximately 82% of postpaid phone subscribers were on unsubsidized pricing plans as of June 30 compared to 75% in the year-ago period. The increase in penetration of unsubsidized plans has helped Verizon return to service revenue growth.

In comparison, AT&T (T) posted combined domestic wireless operations service revenue of $13.7 billion in the second quarter, down ~5.5% YoY. T-Mobile’s wireless service revenue increased ~6.5% YoY to $7.9 billion, while Sprint’s (S) service revenue from the wireless component decreased ~4.6% YoY to $5.5 billion in the same period.

Advertisement

More From Market Realist