Video has become such a low-order bit at Verizon that it barely got a mention in the company’s second-quarter earnings release and went unmentioned in its earnings call Wednesday morning.
In between positive overall numbers — the New York telecom giant beat expectations by reporting $1.40 in earnings per share and net income of $5.9 billion — Verizon’s Fios home service lost another 62,000 video subscribers as it gained 92,000 broadband subscribers.
While the video loss constituted less of a bloodletting than the 82,000 TV subscriptions that vanished in Q1, it still brought the total of Fios video connections down to 3.71 million — more than a 20% drop from the 4.67 million total of four years ago.
Fios broadband, meanwhile, now boasts 6.39 million connections. Extrapolating the approximately 7% quarterly growth in Fios internet and 7% shrinkage in Fios video over the next two quarters, Verizon’s broadband Fios subscribers will be more than double its video customers by the end of the year.
In a research note, MoffettNathanson noted that Verizon was actually suffering less from the continued crumbling of pay TV than peer companies: “Their decline rate of 6.9% is now a little better than the rate of decline for the industry overall.”
New Street Research, meanwhile, called video losses “a bit better than feared,” citing its own estimate of 78,000 and a consensus forecast of 75,000.
Verizon executives, meanwhile, steered clear of the topic of video on the earnings call aside from briefly lauding Mix & Match, the pricing shakeup it launched in January 2020, for its role in boosting total Fios revenue to $2.9 billion, a record number.
Mix & Match’s decoupling of broadband and TV pricing has left would-be Fios customers with an exceptionally soft sell for video on Verizon’s site; Verizon may not have completely dumped linear TV, but it’s acting a lot like it’s written off that line of business.
Verizon Media provided a brighter spot in the company’s earnings, with earnings hitting $2.1 billion — a 50% jump from a year ago. But with Verizon due to close its $5 billion sale of the group built around Yahoo and AOL to Apollo Global Management in the middle of the third quarter, its bid to build a business in online content will not factor into future quarters.
On Wednesday’s call, Verizon CEO Hans Vestberg and CFO Matt Ellis devoted most of their time to the company’s much larger wireless business, and in particular the 5G end of that.
“It is remarkable the difference a year can make,” Vestberg said at the start of the call. “Our network and in-store traffic are almost back to pre-pandemic volumes.”
The company gained 528,000 retail postpaid additions to hit 121.3 million total retail connections. Wireless service revenue reached $16.9 billion, up 5.9% from Q2 of 2020.
Millimeter-wave 5G service, which has delivered exceptionally fast service but exhibited exceptionally limited coverage in third-party tests, has seen serious growth in the urban areas in which Verizon has deployed it.
“We’ve seen millimeter wave usage increase 290% year-to-year to date,” Vestberg said, adding that Verizon expects to see 5% to 10% of “dense urban traffic” be on mmWave by the end of the year.
Significantly expanding the reach of faster 5G at Verizon will have to wait until the company can deploy service on the C-band mid-band spectrum it picked up in an FCC auction earlier this year.
Ellis repeated an earlier pledge to build out 7,000 to 8,000 C-band cell sites this year and said the “vast majority” of Verizon 5G phones in service (about 20% of the total phone base) were already C-band capable.
The company also plans to use C-band to build out its fixed-wireless home broadband service, which today is split between scarce 5G (Vestberg only said it’s available “across 47 markets”) and slower 4G (now in parts of all 50 states). In particular, it will ship a new home router with support for these longer-range midband frequencies.
That, in turn, could put more pressure on other broadband providers that have seen their video business erode even faster than Verizon’s.
“We want to be a nationwide broadband provider,” said Vestberg. “We’re going to use the technology that is best for our customers.”