Verizon Puts Focus on Yahoo After Phone Subscriber Slowdown and Pay-TV Losses

Maturing Phone Business Turns Verizon Toward Internet Acquisitions

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Verizon is acquiring Yahoo for $4.8 billion.
Verizon is acquiring Yahoo for $4.8 billion. Credit: Christopher Dilts/Bloomberg

Verizon Communications posted wireless subscriber gains that missed analysts' estimates, putting pressure on CEO Lowell McAdam to outline how the $4.8 billion deal for Yahoo will help the company augment its maturing phone service business.

The company added 615,000 total monthly mobile subscribers, trailing the 785,000 estimate average of six analysts surveyed by Bloomberg. The nation's largest wireless carrier gained 86,000 postpaid phone customers in the quarter. Analysts projected a gain of 272,000.

With the wireless industry maturing, Mr. McAdam has pushed Verizon toward acquisitions of internet and advertising technology companies, including AOL and Yahoo, as a way to compete with Alphabet's Google and Facebook in mobile advertising. Yahoo has millions of users, a collection of websites including Flickr, Tumblr and Yahoo Finance and Sports and some useful digital-ad tech like Flurry and BrightRoll.

Verizon lost 41,000 Fios TV and 13,000 Fios internet subscribers in the second quarter in large part because of a six-week strike by 39,000 union workers over disputed contract talks on pay, job security and benefits. Requests including new service installations were delayed, and earnings were negatively impacted by about 7 cents per share in second-quarter 2016 by the work stoppage. Yet total revenue for Fios services increased 3.7%, to $2.8 billion, from a year earlier.

Second-quarter earnings, excluding some items, were 94 cents a share, the New York-based company said in a statement Tuesday. Analysts predicted 92 cents, according to estimates compiled by Bloomberg.

Second-quarter revenue was $30.5 billion, compared with $30.7 billion, the average analyst estimate. The carrier also added 356,000 tablet customers in the quarter, compared with analysts' projection for 503,000. Retail postpaid churn was 0.94% in second-quarter 2016, an increase of 4 basis points from last year.

-- Bloomberg News

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