2min read Verizon Communications Inc. reported its third-quarter results. The telecommunications giant posted a 2.6% YoY decrease in total operating revenue, which came in at $33.3 billion. Despite this decline, the company managed to exceed expectations in several areas, such as total broadband net additions, wireless service revenue growth, and improving profitability.
Adjusted EPS was $1.22, compared to $1.32 in the same period last year, slightly beating expectations of $1.18. The company's total operating revenue was $33.3 billion, down 2.6% from the previous year's third quarter. Verizon's net income for the quarter was down by 2.8% at $4.9 billion, but its consolidated adjusted EBITDA was up 0.2% at $12.2 billion compared to the same period last year.
Despite this decline in earnings and revenue, the company raised its annual free cash flow forecast and saw a premarket boost of 1.8%. Year-to-date cash flow from operations increased from $28.2 billion in 2022 to $28.8 billion in 2023.
Total broadband net additions for the third quarter of 2023 were 434,000, with 384,000 fixed wireless net additions. This marked the fourth consecutive quarter with over 400,000 broadband net additions. Verizon has now reached approximately 10.3 million total broadband subscribers, including nearly 2.7 million subscribers on its fixed wireless service.
Total wireless service revenue increased by 2.9% year over year to reach $19.3 billion, driven by targeted pricing actions, the allocation of fees into wireless service revenue, and growth from fixed offerings wireless. Postpaid phone net additions reached 100,000 and retail postpaid net additions amounted to 581,000. The company's retail postpaid churn was 1.15%, with retail postpaid phone churn at 0.90%.
During the earnings call, Verizon's CFO acknowledged that prepaid services continue to be a headwind in the near term. However, the company is focused on expanding its fiber assets, despite the high hurdle to acquire more such assets.
Regarding its fiber assets, Verizon CEO says the hurdle is high to acquire more fiber assets. The company's prepaid business continues to be a near-term headwind. Despite the headwinds, Verizon is on track to exceed postpaid phone adds in Q4, building on a performance highlighted by continued wireless service revenue growth, total broadband net additions, and improving profitability.
For 2023, Verizon forecasts a cash flow from operations between $36.25 billion and $37.25 billion. Capital spending is expected to be at the higher end of the previously guided range of $18.25 billion to $19.25 billion, with free cash flow above $18 billion, a $1 billion increase from the previous guidance.
The company expects total wireless service revenue growth of 2.5% to 4.5%, with adjusted EBITDA ranging from $47.0 billion to $48.5 billion and adjusted EPS at $4.55 to $4.85
Shares of VZ reacted favorably to the report. Investors were happy to see the raised free cash flow guidance as it suggests the healthy 7.71% dividend yield looks protected. Shares of VZ rallied 8.9% in reaction to trade at its best levels since September 5. The stock blasted through its 50-sma ($32.88) and has broken its downward trend. It is challenging the downward trend on its Weekly and Monthly charts which will be key for investors to track.
