VZ Rides on Healthy Traction in the Consumer Segment: Will it Persist?

Verizon Communications Inc.'s VZ business has been gaining solid traction in the Consumer segment, backed by some major growth drivers. As of first-quarter 2025, the company’s wireless retail connections were 115.1 million, with wireless retail postpaid connections being 94.9 million. Core prepaid connections were 19 million. Service revenues improved to $20.8 billion, up 2.7% year over year, while equipment revenues were $4.5 billion. A retail postpaid phone churn of 0.9% indicates healthy customer retention. The company’s wireless retail postpaid ARPA was $146.46 at the end of the first quarter, up 3.6% year over year. 

It is steadily building the entire network infrastructure and ecosystem to provide the most amazing 5G experience to customers. The company has witnessed increased adoption of 5G devices and premium unlimited plans. Verizon’s customer segmentation strategy, which categorizes different client groups, helps it deliver tailored solutions to different sectors. Such personalized offerings help in client retention, drive average revenue per account growth.

VZ’s effective customer-focused strategy, combined with a strong 5G network, is a major tailwind. Its three-year price lock guarantee will ensure the core monthly plan price for calling, data and texting will not change in the next three-year period, excluding taxes, fees and perks. The company also introduced cutting-edge AI-native features to boost customer service. Such initiatives are driving customer engagement. Moreover, the company’s C-Band spectrum offers greater coverage for 5G networks and greater speeds than on low-band spectrum and paves the way to provide differentiated service of 5G Ultra-Wideband to millions of customers.

Steady growth in wireless equipment revenues is expected to drive improvement in this segment. Per our estimate, the company is expected to record $20.93 billion in revenues in 2025 from wireless equipment sales, indicating healthy 6.8% year-over-year growth. Per our estimate, wireless retail postpaid ARPA is projected to reach $151.49, indicating 9.6% year-over-year growth.

How Are Competitors Faring?

Verizon operates in a highly competitive and saturated U.S. wireless market. It faces significant competition from T-Mobile, US, Inc. TMUS and AT&T, Inc. T. 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 first quarter, T-Mobile’s postpaid phone churn rate was 0.91%.

AT&T is investing in key areas of 5G and fiber and adjusting its business according to the evolving market scenario to fuel long-term growth. With a customer-centric business model, AT&T is witnessing healthy momentum in its postpaid wireless business with a lower churn rate and increased adoption of higher-tier unlimited plans. The company reported a postpaid churn of 0.83% in the first quarter of 2025.

VZ’s Price Performance, Valuation and Estimates

Verizon has gained 4.8% over the past year compared with the Wireless National industry’s growth of 26.6%.

Going by the price/earnings ratio, the company’s shares currently trade at 9.06 forward earnings, down from 13.57 for the industry but above the stock’s mean of 8.98. It carries a Value Score of A.

Earnings estimates for 2025 have remained unchanged at $4.69 over the past 60 days, while the same for 2026 has improved 1.23% at $4.92.

Verizon currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

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