Verizon Communications (VZ) reported mixed results for the third quarter of 2024, posting a slight dip in stock price despite beating earnings expectations.
The company added a strong number of wireless subscribers, but flat revenue and slowing growth in its wireless services dampened investor optimism.
This performance reflects the challenges Verizon faces in a highly competitive market, where it’s balancing steady subscriber growth with stagnating revenues.
Verizon’s adjusted earnings for Q3 came in at $1.19 per share, slightly above analysts’ estimates of $1.18, but still down 2% year-over-year. The company’s revenue remained flat at $33.3 billion, just below Wall Street’s expectations of $33.5 billion.
The standout figure was Verizon’s addition of 239,000 postpaid phone subscribers, beating estimates of 218,000, demonstrating strong demand for its wireless services.
These postpaid customers are Verizon’s highest spenders, making their acquisition a crucial factor in the company’s long-term growth strategy.
Despite the strong subscriber growth, Verizon’s wireless service revenue growth slowed to 2.7%, down from 3.5% in the previous quarter, highlighting competitive pressures in the telecom sector.
Verizon’s success in adding fixed wireless broadband customers, 363,000 in Q3, bringing its total to 4.2 million, shows its efforts to expand beyond traditional wireless services.
The fixed wireless broadband market has become increasingly important, with total FWA revenue for the quarter reaching $562 million, a significant 62% increase from the prior year.
This diversification into broadband services reflects Verizon’s adaptation to broader market trends of increased connectivity demand.
Check this out: Is it a Wise Choice to Invest in Philip Morris?
Will Verizon’s $20B Frontier Acquisition Be the Game-Changer Against AT&T and T-Mobile?
Verizon is operating in a landscape of heightened competition, with AT&T and T-Mobile showing stronger stock performance in 2024. AT&T stock has surged nearly 30% and T-Mobile stock is up 39%, outpacing Verizon’s 16% growth.
However, the company’s recent announcement to acquire Frontier Communications for $20 billion could be a game-changer.
Frontier is a major fiber provider, with 10 million expected home passings by the end of 2026, offering Verizon a stronger foothold in the broadband space.
This acquisition could fuel long-term growth, but it may also delay Verizon’s stock buyback plans, which investors have been anticipating.
Frontier Deal Offers Long-Term Promise, But Verizon Faces Near-Term Pressures
Verizon’s third-quarter results paint a mixed picture of its current position. While the company continues to see strong subscriber growth, particularly in fixed wireless broadband, its flat revenue and slower growth in wireless services highlight ongoing challenges in the highly competitive telecom industry.
The acquisition of Frontier Communications presents a promising opportunity for future expansion, particularly in the broadband market, but the financial benefits of this deal may take time to fully materialize.
Despite these short-term challenges, Verizon remains a stable investment choice, offering long-term potential through its strategic diversification efforts.
Although Verizon is positioning itself for future growth through diversification and acquisitions, investors should remain mindful of potential risks.
Delays in realizing the full financial benefits of the Frontier deal, along with pressures from competitors, may impact the company’s near-term performance.
However, Verizon’s forward-looking approach remains cautiously optimistic, and effectively managing these risks will be essential to maintaining investor confidence moving forward.
Read also: Treasury Yield Surge: 10-Year Hits Highest Levels Since July and Here’s Why Lululemon is a Standout Buy.
