Verizon Earnings: Price Cuts Have Revived Customer Growth Without Igniting a Price War Thus Far

Key Morningstar Metrics for Verizon Communications

• Fair Value Estimate
  : $54.00
• Morningstar Rating
  : ★★★★
• Morningstar Economic Moat Rating
  : Narrow
• Morningstar Uncertainty Rating
  : Medium

What We Thought of Verizon Communications’ Earnings

Verizon Communications VZ reported a 3.5% increase in service revenue during the second quarter. Excluding the benefit of the Frontier acquisition, service revenue was down about 1.7%. Wireless and fiber broadband growth improved, flipping to a small increase from a small decline last quarter.

Why it matters: Verizon’s results echo those of rivals AT&T and T-Mobile, showing signs of modestly receding competitive intensity. Customer defections, or churn, decelerated year over year for the first time since 2024. Phone discounts weren’t a factor, as customer upgrades were the slowest on record.

• Lower service pricing has been the biggest source of Verizon’s improvement. We estimate revenue per phone customer dropped about 4% versus a year ago, significantly narrowing the gap between it and T-Mobile. Verizon’s share of new customer decisions, or gross adds, has rebounded nicely.
• While traditional postpaid wireless revenue is declining, contributions from prepaid, wireless broadband, and wholesale have mostly offset this loss. Wireless broadband customer growth has slowed, though, as Verizon prioritizes its fiber offering.

The bottom line: We increase our fair value estimate to $54 per share from $53.

• We’re pleased to see that competitive intensity has not ramped back up in response to Verizon’s moves to bring its wireless pricing in line with rivals. This dynamic supports our narrow economic moat ratings on the wireless carriers.
• The firm also discussed fiber agreements to connect data centers for the first time. This opportunity could provide modest additional upside to our fair value estimate.

Big picture: Verizon management matched AT&T and Verizon in forcefully denying that it has any interest in a wholesale wireless partnership with SpaceX or any other satellite provider.

• The firm revealed that other firms can’t piggyback on its wholesale agreements with Comcast and Charter, throwing water on the idea that SpaceX might acquire one of these firms to get into the wireless market.