Verizon revenue drops as pandemic slows phone shopping

Verizon Communications Inc. continued to add cellphone customers during the pandemic, though quarterly revenue declined in its core wireless business and its online advertising unit.

The largest U.S. cellphone carrier by subscribers reported a net gain of 173,000 postpaid phone connections during the three months that ended in June. That figure included past-due accounts that were still in service under the federal Keep Americans Connected pledge.

Verizon counted 119.9 million active wireless connections, which include tablets, smartwatches and other cellular devices, at the end of June.

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U.S. wireless and broadband-service providers agreed earlier this year to waive late-payment and overage fees and keep service active for customers unable to pay their bills during a pandemic that had already forced tens of millions of Americans to work from home. The program ended in June, putting hundreds of thousands of customers at risk of losing service.

Verizon's latest report only covered the second quarter, when the pledge was still active. The carrier said it enrolled many customers in extended repayment plans in July to keep them on its rolls.

"We believe the vast majority of these accounts can be cured over time," Chief Financial Officer Matt Ellis said during a conference call with analysts, though he warned that expectation hinges on the economic environment.

Ticker	Security	Last	Change	Change %
VZ	VERIZON COMMUNICATIONS INC.	42.51	+0.28	+0.68%
T	AT&T INC.	22.98	+0.15	+0.66%

Rival AT&T Inc. on Thursday reported a net loss of 151,000 postpaid phone subscribers, a figure that counted 338,000 past-due subscribers as disconnections, though they maintained service during the pledge.

Verizon, which temporarily closed its retail stores as the coronavirus pandemic spread across the U.S., said its device-upgrade rate fell to 3.7% from 4.3% a year earlier as weak retail traffic crimped smartphone sales. The company said more than 60% of its locations were open by the end of the second quarter and it expects to be close to fully open by the end of July.

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Overall, the company's total revenue slipped 5.1% to $30.4 billion. Wireless-service revenue fell 1.7% in the second quarter from a year ago, but the company forecast it would be flat to down 1% in the third quarter. Revenue in the company's media business, which includes its Yahoo and AOL properties, declined 25% in the quarter to $1.4 billion.

Net income attributable to Verizon reached $4.7 billion, or $1.13 a share, compared with $3.9 billion, or 95 cents a share, a year earlier. Fewer phone sales helped boost Verizon's bottom line because devices sold to customers offer carriers little to no profit. Total equipment costs dropped 18%.

The Covid-19 pandemic upended companies' profit projections this spring and forced many to set aside more cash for unexpected expenses. Verizon earlier this year pulled its revenue guidance and lowered its annual adjusted per-share profit projection to a range between 2% growth and a 2% decline. The company on Friday reiterated that prediction.

Executives have also said the essential nature of cellphone and broadband service could benefit earnings. The company in April agreed to buy Blue Jeans Network Inc., a videoconferencing service that targets corporate clients, as the pandemic triggered a work-from-home wave.

The company's consumer unit reported a net gain of 10,000 Fios broadband subscribers despite a temporary pause in some in-home installations. Fios pay-TV customers dropped by 81,000 as more Americans cut the cable cord in favor of cheaper streaming video options.