By Maria Armental
Verizon Communications Inc. warned Monday that its promotional
offers, along with strong customer volumes, will put short-term
pressure on its margins and per-share earnings in the fourth
quarter.
The company said its additions of the most lucrative long-term
wireless contracts are tracking higher in the current quarter than
in the previous period and a year earlier, partly thanks to new
device launches that are driving phone upgrades.
But disconnects are also trending higher both sequentially and
year over year in the promotion-filled quarter.
A year earlier, the company added a net 1.6 million of the most
profitable postpaid subscribers. In the second quarter, that figure
was a 1.52 million.
The company said it is seeing strong customer demand for 4G
smartphones and tablets on its shared data plans. Verizon has
relied heavily on signing up tablets as a way of keeping its
subscriber numbers positive and has even given away tablets free
when customers add them to their data plan.
The company in late February completed its deal to gain full
ownership of Verizon Wireless, buying Vodafone Group PLC's 45%
stake in the wireless carrier for $130 billion. The acquisition is
expected to sharply increase Verizon's profits this year and will
give the company more flexibility in driving Verizon Wireless's
future. Verizon has said it is looking to focus on smartphone
penetration and connected devices, such as cars and tablets, to
boost sales at Verizon Wireless.
The company, which plans to report results Jan. 22, also
affirmed its capital spending plan for the year at about $17
billion.
Write to Maria Armental at maria.armental@wsj.com
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