Verizon revenue misses estimates as fewer upgrade their equipment

Verizon Communications Inc. reported operating revenue that missed analysts’ estimates as fewer people upgraded wireless equipment.

Total operating revenue was $32.8 billion, up less than 1% from a year ago, while analysts were looking for $33.1 billion on average. Verizon shares fell 6% to close at $39.09 in New York on Monday.

The weak overall growth masked surprising gains in wireless phone customers and an increase in fixed wireless broadband internet customers. Wireless service revenue was $19.8 billion in the three months that ended in June, the company reported on Monday, up 3.5% and in line with analysts’ estimates.

The biggest U.S. mobile carrier, Verizon gained 148,000 wireless retail postpaid phone customers, beating estimates for 118,000. Verizon has made efforts to avoid losing subscribers to rivals, through perks like a bundled plan that includes Netflix and Hulu Max for an extra $10 a month. Customers can also add a Disney+ or an Apple bundle.

The New-York based carrier has been focusing on its fixed wireless product, which delivers high-speed internet over airwaves rather than through lines into the home. The company said it added 218,000 consumer subscribers in the second quarter, a 7.4% increase from the first three months of the year, and 160,000 business customers signed on, the highest quarterly result to date. That gives the company a base of more than 3.8 million fixed wireless customers, an increase of almost 69% from a year earlier.

Growth in fixed wireless is helping to offset an overall decline in broadband subscribers, after a government subsidy program ended in June. The Affordable Connectivity Program provided low-income households with a monthly discount toward broadband internet service. The company reported total broadband net additions of 391,000, in the second quarter, down 6.5% from a year ago but beating estimates, boosted by gains in fixed wireless and its Fios wired product, Verizon said.

Adjusted earnings were $1.15 per share, in line with analysts’ forecasts. The company confirmed its outlook for the year of wireless service revenue growth of 2% to 3.5% and adjusted earnings per share of $4.50 to $4.70.

Verizon shares have gained about 10% so far this year, lagging wireless rivals AT&T Inc. and T-Mobile US Inc., which are both up about 14% in the same period.