Verizon Falls to 11-Year Low After Stumble on Subscriber Growth

(Bloomberg) — Verizon Communications Inc. missed subscriber estimates for the second straight quarter as the largest US wireless carrier struggles to keep pace with rivals that have made gains by offering deep discounts and improved mobile service.

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The company added only 8,000 monthly wireless phone subscribers in the third quarter, according to a statement Friday, well below analysts’ predictions for 38,500 new phone customers.

Its shares fell as much as 5.3% to $35.03, the lowest level since September 2011. The stock declined 29% this year through Thursday’s close.

The results point to Verizon’s challenges in a much more competitive market, contrasting with rival AT&T Inc., which reported strong profit and subscriber growth Thursday.

Verizon has been working on its approach, Chief Financial Officer Matt Ellis said in an interview. With the introduction of new service plans in the past few months, “we’re seeing more foot traffic in stores and it’s starting to build some momentum,” Ellis said.

He also pointed to price and fee increases earlier in the year that are expected to boost revenue by $1 billion in the second half.

The subscriber challenges marred results for a quarter in which profit and sales were better than expected. Adjusted earnings for the period were $1.32 a share, ahead of the average analyst estimate of $1.28. Revenue of $34.2 billion topped estimates of $33.8 billion.

Restructuring Plan

The company says it plans a cost-savings program that will reduce annual expenses between $2 billion and $3 billion by 2025.

“We are restructuring some of the groups,” Ellis said. “We’re moving some functions into the new global services group to take advantage or our scale in a way we haven’t in the past.”

Ellis said there weren’t specific job-cut numbers related to the restructuring. “As we work to streamline the processes, we’ll see what the impacts are.”

Verizon is hoping to find customer growth in the prepaid market where it has launched Total, a new pay-as-you-go mobile brand, and a prepaid wireless broadband service it is selling at Walmart.

A bright spot: the company added another 342,000 wireless home internet customers in the quarter. This broadband service beams signals directly to a home Wi-Fi router. The service rivals a similar offer by T-Mobile US Inc. and both companies are using the lower-cost internet access to take broadband customers from cable and other providers.