Verizon Communications, Inc. (NYSE: VZ – $49.22) reported revenue slid more than expected in the latest quarter as subscriber additions plunged amid a pricing war that continues to weigh on the nation’s largest wireless provider. It was the second straight quarterly decline for the top line after six years of growth. For the September period, Verizon said it added 442,000 net retail postpaid wireless subscribers, a 66% drop from the prior-year period. Postpaid churn, or the rate at which customers canceled service, rose 11 basis points to 1.04% from a year ago. Revenue slipped 6.7% to $30.94 billion, below estimates of $31.09 billion. Excluding certain items, adjusted earnings were $1.01 a share, just above analysts’ expectations of $0.99. Verizon’s FIOS TV and high-speed internet business, which has been lagging, began to pick up. Verizon added a net 90,000 internet customers in the quarter in the quarter and gained 36,000 video customers. The company may also take another look at the price being offered for Yahoo!’s internet assets after Yahoo!’s massive data breach.
Verizon, which has been facing rising competition, has warned that earnings may plateau in 2016 as it works through changes it has made to keep its wireless plans in line with rivals. The company backed its guidance for 2016 per share earnings to remain flat with 2015 at $3.99. Analysts see 2017 earnings moving a bit higher to about $4.03 per share. Long-term investors may wish to consider Verizon stock, however. At current levels, the shares are valued reasonably at 12 times earnings and the issue’s 3- to 5-year appreciation potential appears to be better than the average equity. What’s more, this high-quality blue chip should pique the interests of conservative and income-seeking types, as its dividend yield of 4.6% is well above the market mean.