Verizon Adds 1.5M Customers in Q4 2015, EPS Beats Analyst Estimates

Verizon brought in revenue of $34.3 billion in Q4 2015, up 3.2 percent from Q4 2014, while beating earnings per share estimates by a penny at 89 cents.

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Verizon ended 2015 on a financial high note, reporting fourth-quarter revenue of $34.3 billion and net income of $5.5 billion, as well as adjusted earnings per share (EPS) of 89 cents, which beat analyst estimates by 1 cent.

The telecommunications company announced its Q4 and full-year 2015 figures in a conference call with analysts on Jan. 21, including 1.5 million net retail postpaid wireless customers added in the quarter. That gives Verizon 112.1 million total retail connections, which includes 106.5 million retail postpaid connections. The company also reported a lower retail postpaid churn rate of 0.96 percent for Q4, down from 1.14 percent for the same quarter one year ago.

The $34.3 billion Q4 revenue figure is an increase of 3.2 percent over the same quarter one year ago, while the full-year 2015 revenue of $131.6 billion is 3.6 percent higher than the $127 billion the company reported for its FY2014 revenue.

The Q4 EPS of 89 cents is up 25.4 percent from the 71 cent EPS recorded in Q4 2014. The adjusted EPS takes into account severance, pension and benefit charges, as well as early debt redemption and other costs, according to Verizon.

Non-adjusted EPS for Q4 is $1.32 compared with a loss of 54 cents per share one year ago. Full-year 2015 EPS is $4.37, up 80.6 percent from the FY2014 EPS of $2.42.

The company also reported growth in its Internet of things revenue for Q4, with revenue of about $200 million in the quarter, as well as $690 million for the full year. The figures are up 18 percent from 2014. Verizon invested about $28 billion for spectrum licenses and capital for future network expansion in 2015, and acquired AOL Inc. for $4 billion last June.

"In 2015, Verizon delivered strong and balanced results in a dynamic competitive environment while returning more than $13.5 billion to shareholders," Verizon Chairman and CEO Lowell McAdam said in a statement. "At the same time, Verizon built and acquired next-generation network capabilities that position the company to be an innovator in the digital-first mobile world in 2016 and beyond."

For Verizon, the fourth quarter and FY2015 results were generally positive in what is a very competitive market filled with price-slashing, criticisms from competitors and value-conscious consumers who today are more willing to jump to another carrier if offered a better deal or improved service.

Jan Dawson, chief analyst at Jackdaw Research, told eWEEK in an email reply that Verizon's Q4 and FY2015 figures are in line with past performance, "but the Verizon results did confirm what we already saw from T-Mobile's preliminary numbers, which is that Q4 2015 was less competitive and less brutal from a competitive perspective than Q4 2014."

Verizon's wireless business is "still going through the same transition most of its competitors went through a little earlier" as it shifts away from device subsidies and moves to get customers signing up for installment plans, said Dawson. "That's causing some revenue erosion on the wireless side, especially as upgrade rates seem to be slowing, and that for equipment revenues onto making up for the loss in service revenues."

Another analyst, Charles King of Pund-IT, said Verizon's customer gains continue to be good news, but that the EPS of just 1 cent above analysts' estimates was a "good but not great" result. "The outstanding questions centered on how the company was doing in regard to competitive issues, and whether it would accrue any significant benefits from its AOL purchase and new service offerings. Overall, Verizon is doing about as well as people expected."

Verizon is "obviously feeling the heat from T-Mobile and others," King said. "You don't offer competitors' customers $650 each [in switching fees per line] to abandon ship otherwise. With mobile/smart phone adoption continuing to slow, Verizon needs to begin monetizing AOL and other new service platforms ASAP or it could face growing pressure on its earnings."

Bill Menezes, an analyst with Gartner, told eWEEK that Verizon's falling churn numbers in Q4 are interesting to watch. "In a tough competitive environment Verizon continues to reduce its customer churn and add significant numbers of postpaid accounts," wrote Menezes. "Given that Verizon generally is not the low-cost provider, that's a sign customers are willing to pay a premium for its network quality and performance."

The latest Q4 figures were an improvement in most categories from the company's Q3 2015 figures, which were reported last October. Verizon chalked up third-quarter revenue of $33.2 billion, which was a 5 percent gain from $31.6 billion earned in the second quarter, with a net income of $4.17 billion, up 9.9 percent from $3.79 billion posted in the prior quarter. Verizon's third-quarter earnings per share came in at 99 cents per share, up from 89 cents per share in the prior quarter. The company added 1.29 million net retail postpaid mobile customers in the third quarter, while 80,000 prepaid subscribers were lost.