Verizon Communications Inc. executives said the launch of new unlimited wireless data plans in August led to strong customer growth in the third quarter, which Verizon plans to build on with its recently announced agreement to offer The Walt Disney Co.'s upcoming streaming service to select customers.
Verizon reported 601,000 wireless retail postpaid net additions for the third quarter, including 193,000 consumer and 408,000 business connections. That compares to 151,000 consumer connections and 364,000 retail postpaid net additions in the third quarter of 2018. Churn, or the percentage of customers who disconnected service, remained fairly stable for wireless retail postpaid consumer and business customers, at 1.05% and 1.22%, respectively.
CFO Matthew Ellis said the new wireless plans helped to push the percentage of customers on its unlimited data offerings up to about 50% for the first time, and the company is targeting more growth in the future. Verizon is offering Disney+, which is set to launch Nov. 12, to its unlimited customers for free for one year. Disney is pricing the new streaming service at $6.99 per month at launch. New Fios residential internet and 5G home internet customers will also receive a year of free Disney+ from Verizon.
CEO Hans Vestberg said the Disney partnership did not represent a "heavy investment" but rather a win for both parties as a way to ramp up consumer interest and further differentiate Verizon from its competitors. The executive also spoke of how the new unlimited pricing plans pave the way for future opportunities to build out new network services as it transitions to next-generation 5G networks.
Verizon has launched 5G services in 15 U.S. cities to date and the company remains on track to reach 30 by the end of the year, Vestberg said. It also plans to launch a 5G mobile edge computing center in the fourth quarter as it aims to build out its enterprise customer relationships.
In its wireline consumer segment, Verizon added a net of 30,000 Fios internet subscribers during the period but lost a net of 67,000 video connections, reflecting the shift from traditional linear video to streaming services. Business net additions were flat year-over-year in both categories, with the company adding a net 6,000 Fios internet and 1,000 Fios video customers.
Verizon on Oct. 25 reported third-quarter net income attributable to the company of $5.19 billion, or $1.25 per share, up 5.5% from $4.92 billion, or $1.19 per share, in the year-ago quarter.
The S&P Global Market Intelligence GAAP consensus EPS estimate for the period was $1.23.
The earnings included a net pre-tax gain of $261 million from dispositions of assets and businesses that was offset by a pension remeasurement pretax charge of $291 million.
Total operating revenues for the quarter edged up 0.9% to $32.89 billion, from $32.61 billion in the prior-year period. The growth was primarily driven by higher wireless service revenue, partially offset by lower wireless equipment revenue and declines in legacy wireline revenue, particularly in the business segment.