What happened
Shares of Verizon (VZ +1.43%) fell 4.5% on Friday, as investors grew increasingly concerned about the wireless giant's waning customer growth.
NYSE: VZ
Key Data Points
So what
Verizon's revenue rose 4% year over year to $34.2 billion in the third quarter. That was slightly above Wall Street's estimates for revenue of $33.8 billion.
However, Verizon gained only 8,000 postpaid phone subscribers, who pay monthly bills and are generally the most profitable customers for wireless carriers. Analysts expected Verizon to report over 35,000 postpaid phone additions.
The shortfall is more alarming when viewed against AT&T's (T +1.26%) stellar results released on Thursday. AT&T gained 708,000 postpaid phone subscribers in the third quarter, furthering a streak of impressive customer gains.
Verizon's price increases may be partially to blame for its comparatively weaker performance. The wireless titan recently added an "Economic Adjustment Charge" to some of its data plans and increased fees for others to offset its rising costs.
Yet these fees have yet to do much to bolster Verizon's bottom line. The company's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) -- a closely followed profitability metric for telecoms -- declined by 0.4% to $12.2 billion.
Now what
Verizon expects its full-year adjusted EBITDA to fall by as much as 1.5% in 2022. To stabilize its declining profit margins, management is implementing a new cost-reduction plan to cut expenses by up to $3 billion by 2025.
But that might not be enough to fend off intensifying competition. AT&T is now a more formidable foe following the divestiture of its Warner media assets in April. The newly streamlined AT&T has refocused its attention and vast financial resources on its core wireless business -- and it could continue to outpace Verizon in the all-important race for postpaid phone subscribers in the quarters ahead.
