Verizon Communications saw its shares decline 2.2 percent during premarket trade after reporting earnings early Thursday due to drop in customers in the face of competition.
The nation’s largest wireless carrier declared a profit of $1.01 a share, excluding one-time items costs, which was higher than the 99 cents expected by analysts but lower than $1.04 for the same period a year ago.
It showed a 6.7 percent decline in sales from a year earlier at $30.98 billion failing to reach $31.07 billion estimate.
The unlimited plans and low pricing offered by competitors like T-mobile and Sprint has hurt Verizon’s ability to attract customers and that’s what we see this quarter, said Alex Zhao, equity research analyst at Morningstar.
This weakness was reflected in the loss of 36,000 postpaid phone customers during the third quarter versus a gain of 430,000 a year ago.
But experts don’t believe the low pricing environment is sustainable and at some point, the competitors will have to raise their prices as well. Next quarter’s release will show whether this drop was an accident or a trend said Zhao.
Verizon in the meantime has no plans to introduce unlimited options like other carries, according to CFO Francis J. Shammo in a conference call with the investors.
“We will continue to be very rational in our competitive response,” he said.
“But as we continue here, unlimited is still not something that we’re going to move to.”
The executives did not provide much information on the Yahoo! data breach, which affected around 500 million accounts, than saying that they are evaluating it.
While some analysts think the breach is significant enough to have some impact its deal of acquiring Yahoo, not everyone believes that it matters as much in the big picture.
“The data breach is almost the cost of doing business now,” said Greg Portell, head of communications, media, and technology at consulting firm ATKearney.
According to Portell, a bigger cause of concern for Verizon will be to find a way to grow now that a lot of its business has matured.
The company has not adjusted its guidance for the rest of the year and said it is on track for its goals for the year.
Verizon recently launched LTE Advanced in more than 460 markets and is investing for future growth in 5G to try and become the first company to launch a 5G fixed wireless broadband solution in the United States.