Subscriber loss at 307,000, Verizon not averse to suitors

Verizon Communications Inc.’ s struggles worsened in the first quarter, as a decision to sell unlimited mobile data services came too late to stanch the worst subscriber loss in more than a decade.

The largest U. S. wireless carrier shed 307,000 customers in the period, dragging down sales and profit and sending shares sinking to their lowest price since November. The performance marks a dramatic reversal from the first quarter of last year, when Verizon added 640,000 users.

Chief Executive Officer Lowell McAdam is consid-

ering merger possibilities to reset the course of the company, and would be open to talks with Comcast Corp., Walt Disney Co., or CBS Corp., Bloomberg reported this week.

“We’re confident in executing our strategy organically,” Chief Financial Officer Matt Ellis said during a conference call, commenting on the Bloomberg report. “If there’s the right opportunity out there to accelerate the strategy inorganically in a way that adds shareholder value, we’re always looking at those opportunities.”

Ellis added that Verizon would “of course” take calls from potential merger suitors. “But we’re also very confident with the assets we have and the plans we have.”

Shares of Verizon fell 53 cents, or 1 percent, to close

Thursday at $ 48.41. They fell as much as 2.5 percent during the trading day. The stock already had declined 8.3 percent this year through Wednesday.

“The company needs a strategic transaction to support their wireless business for the long- term,” Jonathan Chaplin, an analyst at New Street Research LLC, wrote in a research note Thursday.

With the wireless industry maturing, Verizon has focused on building a fiber- rich 5G network and developing a mobile media and advertising business that will place the company in direct competition with tech giants Google and Facebook.

In the meantime, Verizon is trying to retain as many customers as it can by allowing them to stream video and use apps on their phones without worrying about exceeding a cap on data use. In its first quarter offering a package that includes unlimited data, the company failed to show investors

it can both add new customers and protect profit — a feat that smaller rival T- Mobile US Inc. has managed to pull off in a price war that has roiled the mobile- phone industry.

The move into unlimited data marked an about- face for Verizon, which steadfastly had refused to offer unlimited data plans for fear of obliterating the bottom line, choosing instead to focus on network quality for the highest- paying customers. But after quarters of slowing subscriber growth, and with a new head of wireless and chief financial officer in the fold, the phone giant went on the offensive in midFebruary.

Ellis said a big customer exodus through the first six weeks of the quarter forced Verizon to go unlimited.

“Though they lost more than 300,000 customers in the quarter it would have been much worse had they not offered unlimited halfway through the quarter,” said Kevin

Roe, an analyst at Roe Equity Research LLC. “Verizon just wasn’t competitive without unlimited, and now they are. The coming quarters will probably look a lot different than the past quarters.”

Verizon reported net income of $ 3.45 billion, or 84 cents per share, for the three months that ended March 31. That’s down from $ 4.43 billion, or $ 1.06 per share, in the same period a year ago.

The results fell short of Wall Street expectations. Analysts surveyed by Zacks Investment Research called for earnings of 98 cents per share.

Revenue fell 7 percent to $ 29.81 billion, missing analyst expectations of $ 30.5 billion, according to Zacks.