Verizon's Mixed Q1: Subscriber Losses Worry Investors

Verizon's subscriber decline raises concerns despite solid earnings. The carrier faces challenges in its core wireless business, although broadband growth shows promise. Professional investors should monitor churn rates and revenue stability as key indicators in the coming months.

Date: 25-04-2025

AI Rating: 6

Investor Overview of Verizon's Q1 Performance

Verizon's recent earnings report reveals a complex performance landscape for the telecom giant in Q1 2025, specifically regarding its postpaid wireless subscriber metrics. The decrease in postpaid subscribers, losing 289,000 after a prior gain of 568,000, suggests potential underlying issues in customer retention. This decline exceeded analyst expectations, indicating heightened market sensitivity.

Despite the churn, Verizon managed to increase its overall revenue by 1.5% to $33.5 billion. Strong growth in broadband, with a 13.7% year-over-year increase in connections, highlights a promising diversification strategy amidst declining consumer and business wireline segments. The net additional broadband connections, particularly through fixed wireless and Fios internet services, could offer a buffer against market volatility.

In terms of adjusted Earnings Per Share (EPS), Verizon reported an increase of 3.5% to $1.19, slightly surpassing the consensus estimate of $1.15. This not only demonstrates resilience in profitability but could also enhance investor confidence in the stock’s short-term outlook, particularly given the strong free cash flow it continues to produce.

Despite the adverse subscriber growth, the company’s free cash flow remains robust, projected to be between $17.5 billion and $18.5 billion in 2025, comfortably covering its significant dividend payouts. With a forward dividend yield of approximately 6.4%, Verizon maintains a compelling income appeal for investors concerned about market downturns.

Overall, while the churn in postpaid subscribers is concerning, Verizon’s ability to grow its broadband segment and its ongoing commitment to shareholder returns through dividends provide a cushion against potential disappointments in subscriber dynamics. The market will be closely watching the impact of new pricing strategies such as the three-year price lock and customized plans designed to enhance customer retention.

Stocks: VZ