Verizon pulls 2020 revenue view as it loses wireless subscribers

(Reuters) – Verizon Communications Inc (VZ.N) withdrew its full-year revenue outlook on Friday as it lost 68,000 phone subscribers who pay a monthly bill in the first quarter amid lockdowns due to coronavirus outbreak that closed 70{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} of its stores.

Verizon shares fell 0.5{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}.

Store closures led to a significant drop in customer activity and device volumes in the quarter, the telecom operator said. The company stopped selling phones in its stores and encouraged customers to buy devices online.

Analysts expected Verizon to gain just 100 subscribers in the quarter ended March 31, according to research firm FactSet.

Verizon reported postpaid phone churn of 0.82{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} in the first quarter, compared to 0.84{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} in the same period last year.

Jonathan Chaplin, an analyst at New Street Research, said in a report that lower churn should have outweighed the impact of lower gross adds.

“Verizon has been losing subscribers in the first quarter for the last few years – churn is higher than gross adds,” Chaplin said. “With the drop in switching activity induced by social distancing, Verizon should have benefited.”

Verizon is the second telecoms giant to pull its guidance after AT&T Inc (T.N).

The company also reduced its full-year adjusted earnings per share outlook to between a growth of 2{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} and a fall of 2{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}. It had earlier expected a growth of 2{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} to 4{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}.

Verizon maintained its capital expenditure guidance of $17.5 billion to 18.5 billion, which was raised by 500 million in March.

The No. 1 U.S. wireless company said that it would continue to roll out 5G, the next generation of wireless, and improve its 4G network. The company said the virus reduced its earnings by 4 cents per share in the first quarter.

VerizonMedia, which owns Yahoo! and TechCrunch, took a big hit from the pandemic’s effects as advertising spending came to a complete halt.

VerizonMedia revenues were $1.7 billion, down 4.0 percent year over year. The company said that it saw more readers on its media platforms, but advertising rates have declined.

Last week, Verizon acquired Zoom video conferencing rival BlueJeans as more people are forced to work from home during the coronavirus pandemic.

In the first quarter, Verizon’s earned $1.26 per share, above analysts’ average estimate of $1.22, according to IBES data from Refinitiv.

Total operating revenue for the wireless carrier fell 1.6{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} to $31.6 billion from a year earlier.

Analysts had expected revenue of $32.27 billion.

Analysts expect to see much of the COVID-19’s impact on Verizon’s businesses in the second quarter.