Verizon Q1 Preview: Will The Postpaid Momentum Continue?
Verizon (NYSE:VZ) is expected to publish its Q1 2018 results on Tuesday, April 24. While we expect the company’s subscriber base to grow, driven by its unlimited data plans, it’s possible that margins will remain relatively flat. In this note, we take a look at some of the key factors to watch when the carrier reports its earnings.
We have created an interactive dashboard analysis which outlines our expectations for the company for 2018. You can modify the key drivers to arrive at your own price estimate for Verizon’s stock.
Postpaid And Prepaid Wireless Business
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We expect Verizon’s bread-and-butter postpaid wireless business to continue its strong trend of subscriber gains, driven by continued uptake of its unlimited data plans and relatively compelling equipment promos on new devices such as the iPhone X and Galaxy S9. During Q4 2017, the carrier added 647k smartphone customers, marking an increase from 456k net adds in the year-ago period. That said, postpaid ARPU could remain sluggish, as unlimited plans put a cap on overage fees and limit revenue upside from high-value customers. Further, its wireless margins could also remain relatively flat amid the aforementioned ARPU pressure. We will also be tracking the progress of the company’s prepaid business, which has been seeing an improving retail footprint and higher data attach rates.
Updates On The 5G Rollout
Verizon appears to be taking the lead in 5G deployments in the U.S., indicating that it will launch the next generation services in three to five cities during 2018. The carrier is investing in its fiber-optic network (it has an agreement to buy 12.5 million miles of fiber per year for the next three years from Corning) while also bolstering its spectrum position. Verizon is likely to hold about 236 and 180 billion Mhz-POP in the 28 GHz and 39 GHz bands, respectively. In comparison, AT&T is estimated to hold just about 40 and 8 billion Mhz-POP, respectively, in the two bands. We will be looking for updates on how the carriers 5G plans are progressing.
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