(Bloomberg) -- Verizon Communications Inc. exceeded wireless-subscriber growth estimates for the second quarter, with promotions for new phones helping the carrier in the race to sign up customers for new, faster 5G services.
Verizon signed up 528,000 regular monthly subscribers in the quarter, the New York-based company said in a statement Wednesday, beating the 360,400 average analyst estimate. Profit rose to $1.37 a share, excluding some items, topping the $1.30 that analysts had expected on average, and the company raised its full-year earnings guidance.
During the quarter, Verizon offered as much as $1,000 to customers who traded in phones and subscribed to top-tier unlimited 5G service plans. The promotional push came after the carrier lost 170,000 subscribers in the first quarter, a stumble in a business where sign-ups are a crucial measure of success. The so-called free phone promotion ends today and Verizon said, while it wasn’t a permanent offer, it could reappear again when needed.
“It was the right promotion at the right time with the economic reopening,” Chief Financial Officer Matt Ellis said on an earnings call Wednesday. “And we wanted to get more customers with 5G devices in their hands.”
The company raised its fiscal-year per-share earnings guidance to a range of $5.25 to $5.35, more than the average analyst estimate of $5.14.
Verizon spent a record $52 billion on 5G airwaves in March and plans to have the new bandwidth available to a third of the nation early next year. T-Mobile US Inc. is about a year ahead of Verizon and AT&T Inc. on deployment of the midband frequencies. They are prized for combining high speed and wider range.
Verizon’s gain in subscribers included 275,000 phone net additions.
The company is selling its Yahoo media unit to Apollo Global Management Inc. for $5 billion to focus more on its network. CEO Hans Vestberg said he expected to close that deal by the end of the third quarter. Similarly, AT&T has made deals to spin off its DirecTV and entertainment divisions and return to its roots as a communications provider.
T-Mobile US Inc. has been the fastest growing wireless carrier for the past four years having gained popularity from giveaways like free Netflix service. AT&T and Verizon have stepped up their promotional efforts this year to help prime the pump for 5G services. The push on pricing, while good for customer growth, could lead to tough choices for the carriers.
“While Verizon responded to recent competition in wireless with aggressive promotions, there is a real risk that competition will only heat further from here, forcing Verizon management to either accept uninspiring subscriber results or cut prices,” New Street Research analyst Jonathan Chaplin wrote in a note Wednesday.
Verizon shares rose 1.1% to $56.19 at 10:08 a.m. in New York. The stock is down more than 4% this year, while AT&T is down about 2% and T-Mobile is up more than 7%.
(Updates with CFO comment in fourth paragraph.)
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