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

January 21, 2016, 2:31 PM UTC
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Lowell C. McAdam, chairman and chief executive officer of Verizon Communications Inc., walks onto the stage during a keynote address at the 2013 Consumer Electronics Show in Las Vegas, Nevada, U.S., on Tuesday, Jan. 8, 2013. The 2013 CES trade show, which runs until Jan. 11, is the world's largest annual innovation event that offers an array of entrepreneur focused exhibits, events and conference sessions for technology entrepreneurs. Photographer: David Paul Morris/Bloomberg via Getty Images
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.