10/20/2016

Verizon Communications Inc  added far fewer wireless subscribers than expected in the third quarter amid a price war with rivals in an oversaturated phone market, and hopes to tap new revenue from its fledgling digital advertising and media business.

The company, whose $4.83 billion deal to buy Yahoo Inc's core business was shaken by a massive data breach at the latter, said on Thursday total operating revenue fell 6.7 percent to $30.94 billion, from $33.16 billion. Analysts had expected revenue in the quarter of $31.14 billion, according to Thomson Reuters I/B/E/S.

Verizon's shares, which have surged about 9 percent this year so far, were down 2.6 percent at $49.07 in premarket trading.

It said it added a net 442,000 retail postpaid subscribers, those who pay their bills on a monthly basis. This was significantly below analysts' estimated 766,300, according to market research firm FactSet StreetAccount.

Smaller rivals such as T-Mobile US Inc and Sprint Corp have rolled out aggressive promotions to win over Verizon's subscriber base.

As the company fends off competition in a maturing wireless market, it has acquired AOL and plans to buy Yahoo in a bid for a set of digital web properties and ad technology tools that will help it compete with internet giants Facebook Inc and Alphabet Inc's Google.

Since the Yahoo data breach involving 500 million email accounts was reported in September, investors have wondered how Verizon will proceed. Verizon's general counsel has said the incident may represent a material event that could allow Verizon to back out of the deal.

Net income attributable to Verizon fell to $3.62 billion, or 89 cents per share, in the third quarter ended Sept. 30, from $4.04 billion, or 99 cents per share, a year earlier.

Excluding items, the company earned $1.01 per share, beating the average analyst estimate of 99 cents per share.

Churn, or customer defections, among postpaid wireless retail customers increased to 1.04 percent of total wireless subscribers, compared with the average estimate of 0.99 percent, according to FactSet.

Reuters (Reporting by Aishwarya Venugopal in Bengaluru and Malathi Nayak in New York; Editing by Saumyadeb Chakrabarty and Bernadette Baum)