Verizon Surges Most in 8 Years as Unlimited Plans Win Back Users

Verizon shares jumped the most in eight years after the phone company returned full-force to wireless subscriber growth with a blistering 614,000 customer additions in the second quarter, according to Bloomberg.

The results prove the biggest U.S. wireless carrier can hold its own in a competitive market with unlimited-data plans. The subscriber growth was more than 10 times higher than analysts had estimated on average, with video-hungry customers turning out in droves for the new all-you-can-eat packages. Adjusted earnings and sales were roughly in line with estimates.

Verizon’s renewed subscriber gains buy it some time while investors wait for developments in its new media ventures. But the wireless price battle is putting pressure on Verizon’s profit margins and analysts predict zero sales growth for three years under the current plan, making the company receptive to M&A deals that reset the course of the company. EO Lowell McAdam said in April that he would take calls from a number of companies including Comcast, Walt Disney or CBS.

In the absence of big deals, Verizon is focusing on building a fiber-rich 5G network and a media venture, Oath, that includes the assets acquired in the purchase of AOL and Yahoo! Verizon hopes to challenge Google and Facebook in mobile advertising by building a big audience with streaming-video offerings like go90.

Earnings, with some adjustments, rose to 96 cents a share, matching the average estimate of analysts. Sales were little changed from a year earlier at $30.5 billion, compared with the $29.9 billion average projection.

Verizon’s customer gains outpaced AT&T’s surprise increase of 127,000 mobile customers, who were attracted to a bundle of unlimited data and discounted streaming video. Both carriers’ user additions came in below the 817,000 jump that T-Mobile US Inc. reported for the second quarter.

On the landline side, Verizon lost 15,000 video customers, and added 49,000 broadband internet subscribers. Analysts predicted a loss of 33,000 TV customers and a loss of 34,000 broadband users.