VZ Verizon Communications Inc

By Sarah Krouse 

Verizon Communications Inc. added lucrative phone customers at a healthy clip in the final three months of 2019 as it worked to build out a faster 5G network, but it continued to grapple with its digital-media business.

The largest U.S. mobile carrier by subscribers added 790,000 postpaid phone connections during the period, compared with 653,000 during the same period a year earlier. JPMorgan Chase analysts expected the carrier to add about 750,000 such connections.

Postpaid customers are considered lucrative for carriers because those subscribers typically pay up monthly under longer-term contracts and are less likely to switch providers. Verizon's largest rival, AT&T Inc., added 229,000 postpaid phone connections during the period, while T-Mobile US Inc. added one million such connections.

Verizon took a roughly $200 million charge to write-down the value of its media business, which is home to Yahoo and AOL web properties. Revenue within Verizon Media Group was flat year-over-year at about $2.1 billion as it continued to confront declining desktop search revenue.

In late 2018 Verizon took a $4.5 billion accounting charge related to that business and has since tried to focus on e-commerce and Yahoo-branded news, sports and entertainment services.

Shares of Verizon slipped 2% in premarket trading. The stock has advanced about 10% over the past year, lagging behind a broader market rally.

Verizon has focused on partnerships, rather than major acquisitions, to attract and retain customers in recent years. The carrier offers wireless and home-internet customers varying degrees of free access to streaming services including YouTube TV, Disney+, Apple Music and Google Stadia videogaming.

The company reported 119.8 million wireless connections, including tablets, smartwatches and other devices, up from 118.65 million at the end of September.

The mobile carrier, like its rivals, is in the process of building out 5G service in dozens of cities and is in search of new business and consumer uses of the next-generation service. Executives have said 5G's fast speeds and low latency will transform manufacturing, entertainment and transit.

For now, however, 5G's reach is limited. Verizon is using ultra high-frequency airwaves for its 5G service, relying in the early days on spectrum that can't travel long distances or penetrate walls. That has led to more limited coverage than rivals using mid- and low-band spectrum.

As it builds out its 5G network, Verizon is trying to generate more revenue by convincing wireless customers to migrate to unlimited data plans. It has encouraged families to mix and match the plans they use, which helps the carrier nudge consumers to pricier plans when they want higher-quality TV streaming or more hot-spot usage.

While the carrier added cellphone customers, its pay-television service, Fios video, lost 51,000 connections in the quarter, and added 35,000 Fios internet connections.

Verizon earlier this month said it would do away with traditional cable bundles and allow customers to also mix the home internet and cable television plans they want without long-term contracts. That move was the start of a long process of de-emphasizing video, an area in which Verizon lacks scale in negotiating programming costs, Citigroup analysts said at the time.

Overall, net income attributable to Verizon was $5.1 billion in the fourth quarter, compared with $1.9 billion a year earlier. The year-ago quarter was weighed down by the large write down on the media business. Revenue rose to $34.8 billion from $34.3 billion a year ago.

The company said it has cut $5.7 billion of the $10 billion in expenses it has vowed to eliminate by 2021. It ended 2019 with 135,000 employees, down from 144,500 at the end of 2018 following a voluntary buyout program.

Write to Sarah Krouse at sarah.krouse@wsj.com

(END) Dow Jones Newswires

January 30, 2020 08:31 ET (13:31 GMT)

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