Wearables boost net adds, IoT revenues up 13% YOY for Verizon

Verizon reported net losses in mobile phones and tablets running on its network during the first quarter, but those numbers were more than offset by growth in other types of connected devices — particularly wearables, according to the carrier.

Verizon gained 260,000 retail postpaid net additions, of which 220,000 were postpaid smartphone net additions. But that’s still an overall net loss of 24,000 in its phone base, Verizon reported, and it also had tablet losses of 75,000. Those losses were offset — and then some — by “other connected device gains, primarily wearables,” Verizon said.

In a Cowen & Co. preview of wireless operator results, the analyst firm had anticipated Verizon’s postpaid phone losses would be around 90,000 for the quarter. Cowen said that it expects to see an overall shift of customers from prepaid to postpaid plans this quarter, with AT&T and T-Mobile US illustrating the trend, due to more aggressive pricing on entry-level postpaid plans.

Verizon reported healthy numbers for its internet of things-related businesses. The carrier continues to work on the integration of its Fleetmatics and Telogis telematics acquisitions; this quarter it put those together under a new Verizon Connect segment. Total revenues for Verizon Connect were $234 million for the first quarter, the carrier said, adding that its IoT revenues (including Verizon Connect) were up 13% year-over-year. That was a bright spot in service revenue numbers. Verizon said that for its wireless segment, service revenues were down 2.4% on a reported basis, but flat when excluding the impact of a new standard for when it recognizes revenues.

Verizon’s stock spiked briefly above $49.90 per share in early trading before falling back to around $49.50 p by midday.

“We began 2018 with strong momentum, and we expect it to continue throughout the year,” said Chairman and CEO Lowell McAdam in a statement. “We are positioning Verizon for long-term growth while executing our strategy today and leading the way for the next cycle of growth for the industry.”

Other highlights from Verizon’s results:

-Verizon reported postpaid retail phone churn of 0.8%, noting that this is its fourth consecutive quarter with that number of 0.8% or better. Total retail postpaid churn was 1.04%.

-The carrier updated its progress on its goal of achieving $10 billion in cumulative cash savings over the next four years, saying that its program is on track and that a business excellence initiative has realied about $200 million in savings so far.

-Verizon’s Oath media business’ gross revenues were down about 13% from the fourth quarter of last year. Verizon said this was expected and due to seasonal variation in display advertising, but that the integration of Oath is “accelerating Verizon’s mobile-first media strategy and positioning it for global reach and future growth from premium content distribution and programmatic advertising capabilities across key verticals.”

 

-Verizon said that it now has 81% of its postpaid phone customers on unsubsidized plans, up from 72% during the first quarter of last year.

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