Verizon expects Oath unit to miss 2020 revenue target
Verizon’s wireless and internet of things businesses continue to be a source of strength, but the company’s Oath media and advertising business reported lower revenues and is expected to miss its revenue target of earning $10 billion by 2020.
Verizon CEO Hans Vestberg praised the company’s “strong operational and financial performance,” adding, “With the beginning of the 5G era in this fourth quarter, we expect that trend to continue. We are investing in networks, creating platforms to add value for customers and maintaining a focused, disciplined strategy.”
Among Verizon’s results on the wireless side:
-The company reported 515,000 retail postpaid net additions. The company added the following details in terms of its net additions for the quarter: net phone additions of 295,000; postpaid smartphone net additions were 510,000; tablet losses of 80,000 and additions of 300,000 other devices, which Verizon said primarily consisted of wearables. Retail postpaid smartphone churn was 0.8%.
-Revenues were up 6.5% year-over-year for wireless, with the unit reporting revenues of $23 billion.
-About 83% of Verizon’s postpaid phone was are on unsubsidized plans, up from 78% in the same time period last year.
– Verizon’s year-to-date capital expenditures were $12 billion through the third quarter, which the company noted included support for its LTE network as well as its commercial launch of its 5G Home service, and “significant fiber deployment in markets nationwide and the pre-positioning for additional 5G services.”
Analyst Walt Piecyk of BTIG noted that Verizon reduced its 2018 capital expenditure guidance:
$VZ lowers 2018 capex guidance to $16.8 – $17.0B from $17.0 – $17.8B
— Walter Piecyk (@WaltLightShed) October 23, 2018
On the wireline side, Verizon reported 54,000 Fios internet net additions and total Fios revenues of $3 billion, up 1.5% from the same period last year.
Meanwhile, Oath’s revenues were down nearly 7% from the same period last year, to $1.8 billion in the third quarter of 2018. “The company expects Oath revenues to be relatively flat in the near term and does not expect to meet the previous target of $10 billion in Oath revenues by 2020,” Verizon said.
The Verizon Connect telematics business saw revenues of $241 million in the quarter. Verizon said that its IoT revenues, including Verizon Connect, were up about 12% year-over-year.
Analyst Bill Ho, founder of 556 Ventures, made a number of observations on Twitter on Verizon’s results:
. Still, postpaid as always is #Verizon's "naan and ghee" – impressive >500K postpaid net adds. 83% of the base is on unsubsidized contracts, damn those consumer holdouts and enterprise customers! $VZ pic.twitter.com/50DXK3LPra
— 🅱🅸🅻🅻 🅷🅾 (@billho888) October 23, 2018
. #Oath value proposition in jeopardy as its 2020 revenue target will be missed. It's probably not fun there. $VZ pic.twitter.com/UGPjHh1InX
— 🅱🅸🅻🅻 🅷🅾 (@billho888) October 23, 2018
