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Verizon Q4 earnings: Heavy Promotions Helped Slow Customer ‘Churn’

January 21, 2016

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Lowell C. McAdam, chairman and chief executive officer of Verizon, in 2013.David Paul Morris/Bloomberg/Getty Images

Verizon (VZ) reported better-than-expected quarterly revenue as heavy promotions helped it to check customer defections and subscriptions rose for the carrier’s high-speed Internet service.

The No. 1 U.S. wireless service provider’s shares rose 1.1% to $44.90 in premarket trading on Thursday.

Wireless retail postpaid subscriptions, however, fell. The company added 1.5 million postpaid subscribers on a net basis in the fourth quarter ended Dec. 31, compared with 2 million a year earlier.

Sales at the company’s FiOS high-speed Internet, TV and phone service rose 6.8% to $3.53 billion.

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Another bright spot was phone sales: wireless equipment revenue rose about 28% to $5.40 billion as more customers chose to buy new devices with installment pricing.

Customer defections, also known as churn, at Verizon’s wireless postpaid business dipped to 0.96% from 1.14%.

Verizon and AT&T (T) have been facing stiff competition from companies such as T-Mobile US (TMUS) and Sprint (S), which have been offering massive discounts on call and data plans.

Verizon last month announced a plan offering customers who switch from AT&T, T-Mobile, and Sprint up to $650 to cover early termination fees.

The company’s operating revenue rose 3.2% to $34.25 billion, beating the average analyst estimate of $34.1 billion, according to Thomson Reuters I/B/E/S.

Net income attributable to Verizon was $5.39 billion, or $1.32 per share, compared with a loss of $2.23 billion, or $0.54 per share a year earlier.

Excluding items, it earned 89 cents per share, above the average analyst expectation of 88 cents.