Verizon Communications missed quarterly revenue on Monday due to slow phone upgrades in the United States, seeing a sharp fall in prepaid wireless subscribers and sending the share down to 3.4% before the bell.
The main culprit behind that is the change in consumer behavior, which shows people are holding on to their phones for longer durations, hurting upgrade rates for telecom companies.
The second-quarter revenue of Verizon was reported to be $32.8 billion, which fell short compared to the analysts’ estimations of $33.06 billion, according to LSEG data.
The company revealed in a report that the revenue growth was offset due to fewer consumers switching out their old phones for new ones. However, this trend might change with the release of Apple’s latest iPhones with artificial intelligence (AI) features.
It was also reported that Verizon added 148,000 net monthly bill-paying wireless phone subscribers from April to June, going above the analysts’ average estimate of 127,870. However, it has lost 68,000 subscribers in the last quarter.
The consumer business report also reported net losses of 8,000 wireless retail postpaid phone subscribers in the latest quarter, compared to 136,000 losses in the past year.
The telecom company’s MyPlan has been a success and has helped it compete against AT&T and T-Mobile US. It has also partnered with various streaming platforms and even raised the price of some older plans to urge consumers to switch to new plans.
During an earnings call, Verizon Chief Financial Officer Tony Skiadas said, “We believe the majority of the pricing churn is now behind us, and we continue to expect full-year consumer postpaid phone churn to be flat or slightly better than last year.”
