Verizon Communications Inc. (VZ.N) exceeded Wall Street estimates for profit and subscriber growth in the second quarter, easing investor concerns as the company begins the costly process of launching 5G wireless services.

• Total wireless subscribers rose by 451,000, which includes 245,000 new phone customers. The remaining additions were hotspots, smartwatches and other connected devices. Earnings, excluding special items, were $1.23 a share. Analysts expected 349,000 new subscribers and earnings of $1.20.

Key Insights

• Verizon took the early lead in 5G network technology, ahead of rivals T-Mobile US Inc. and AT&T Inc., and now offers the advanced mobile service in parts of nine cities. Being first is starting to pay off on the subscriber front, with better traction expected next year, when more 5G phones are available and coverage areas are broader.
• Chief Executive Officer Hans Vestberg, who took the helm a year ago after working most of his career at network-equipment maker Ericsson AB, has shrunk investments in areas like media and advertising to focus more on network expansion, particularly toward 5G technology.
• Verizon faces a changing field of competitors as T-Mobile and Sprint Corp. are poised to combine. As part of that deal, satellite-TV provider Dish Network Corp. plans to enter the wireless service arena as a new fourth player.

Market Reaction

• The shares were up 1.3 per cent to US$56 in U.S. premarket trading Thursday. The stock is down 1.7 per cent this year, lagging behind gains of around 19 per cent by AT&T and the S&P 500 Index.