Can VZ Sustain its Subscriber Momentum Amid Growing Competition?

Verizon Communications VZ is one of the largest telecommunication service providers in the United States, offering communication services in the form of local phone service, long-distance calls, wireless and data services. The company operates in a highly competitive and saturated U.S. telecom market. Amid this backdrop, technical superiority, quality of services and scalability are the parameters a telecom service provider has to excel to maintain its competitive edge. Stiff competition with a relatively fixed pool of users is putting pressure on pricing and limiting VZ’s ability to attract and retain customers to some extent.

Despite these issues, Verizon was able to gain traction in its wireless service business, which generated $20.9 billion in revenues during the second quarter, up 2.2% year over year, beating the Zacks Consensus Estimate of $20.22 billion. Wireless retail postpaid churn was 1.12%. Verizon registered solid broadband growth with total fixed wireless access net additions of 278,000, growing the subscriber base to more than 5.1 million. 

Verizon has taken a multi-dimensional approach to gain traction amid fierce competition. The company has been investing in improving its 5G infrastructure and capacity nationwide. The 20$ billion acquisitions of Frontier Communications has accelerated its fiber expansion.

The company has undertaken pricing adjustments and introduced tailored plans to match the requirements of different customer segments. Verizon’s Total Wireless has recently introduced the California LifeLine program under which many customers can opt for unlimited talk, unlimited text, and 6GB of high-speed data every 30 days for as low as $0 per month. The company is also offering flexible payment arrangements for U.S. Military, Coast Guard, first responders and federal employees during the government shutdown period. 

Verizon’s customer-focused approach has allowed it to gain subscriber momentum despite high competition and market saturation. But this has also strained margin expansion to some extent. It is to be seen whether the company can sustain the balance between investment in network enhancement and expenses in promotional activities and customer retention while ensuring growth in revenue and profitability.

How Are Competitors Faring?

Verizon faces competition from T-Mobile, US, Inc. TMUS and AT&T, Inc. T in the telecom space. AT&T is investing in key areas of 5G and fiber, and adjusting its business according to the changing market dynamics to drive sustainable growth. In the second quarter, AT&T witnessed solid subscriber momentum with 479,000 post-paid net additions. Postpaid churn was 1.02%. The company has acquired Lumen Mass Markets’ fiber assets to expand its fiber footprint nationwide. It recorded net fiber additions of 243,000 in the second quarter.

T-Mobile continues to boast a leadership position in the 5G market. Its Ultra Capacity 5G delivers superfast speeds, powering 5G smartphones and enabling innovators to deliver transformational 5G experiences. During the quarter, T-Mobile added 1.7 million postpaid net customers and 318,000 postpaid net accounts. Postpaid phone net customer additions were 830,000.

VZ’s Price Performance, Valuation and Estimates

Verizon has lost 7.8% over the past year against the Wireless National industry’s growth of 2.3%.

Going by the price/earnings ratio, the company’s shares currently trade at 8.27, down from 12.55 for the industry.

Earnings estimates for 2025 and 2026 have declined over the past 60 days.

Verizon currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research