Verizon Earnings: Punching Back Against the Competition Is a Costly Necessity

Key Morningstar Metrics for Verizon Communications

• Fair Value Estimate: $53.00
• Morningstar Rating: ★★★★
• Morningstar Economic Moat Rating: Narrow
• Morningstar Uncertainty Rating: Medium

What We Thought of Verizon Communications’ Earnings

Verizon Communications’ VZ revenue growth reached 5% year over year, driven by a surge in phone upgrades. Service revenue growth remained below 2%. Free cash flow hit $8.8 billion during the first half of 2025, up 4%. Management raised 2025 cash flow expectations to $19.5 billion-$20.5 billion on tax savings.

Why it matters: Wireless competition remains a concern. Verizon’s promotional efforts have effectively attracted new customers, but not quite enough to offset losses to other carriers. The firm lost 9,000 net postpaid wireless phone customers during the quarter, versus 26,000 gained last year.

• The pace of postpaid phone customer defections, or churn, hit 0.97%, up from 0.85% a year ago. The firm increased its retention efforts in late June, but management declined to provide details on the results thus far or commit to improving churn in the second half of the year.
• Replacing lost customers is expensive, but EBITDA still increased 4% year over year, as cost savings efforts offset higher reported phone subsidy costs.

The bottom line: Our fair value estimate remains $53 per share, and we think the shares are attractive. As the largest US wireless carrier, Verizon faces the most pressure when competitive intensity rises, but we expect competition to moderate beyond 2025.

• Management reiterated multiple times that it won’t chase growth and will remain disciplined with its offers.
• Verizon expects phone upgrades to moderate in the second half of the year, indicating lower competitive intensity. Ultimately, however, the firm depends on the actions of other carriers, which may not be rational. This mutual dependency limits our moat ratings on the carriers to narrow.

Long view: With the extension of bonus depreciation, Verizon will save $1.5 billion-$2.0 billion in taxes in 2025. Unlike AT&T, which plans to increase investment, Verizon maintained its capital spending budget for 2025 and will reevaluate capital allocation after the Frontier acquisition closes next year.