Verizon Communications Inc., the largest U.S. wireless carrier, exceeded profit estimates on stronger customer gains even as rivals including T-Mobile US Inc. brought more price competition to the industry.
Second-quarter earnings, excluding some items, of 91 cents a share beat the 90 cents that analysts projected on average.
While subscriber growth drove the profit gains, wireless margins and the size of customers’ phone bills were smaller than analysts expected.
Chief Executive Officer Lowell McAdam announced this month that Verizon added 1.4 million contract customers in the quarter, an improvement from 941,000 a year earlier. More than 82 percent of those new customers were tablet buyers, Verizon said Tuesday.
With the company selling more tablets than phones and offering discounts on data plans, customers’ monthly phone bills will likely shrink, putting more pressure on wireless margins, said Kevin Smithen, an analyst with Macquarie Securities USA.
Second-quarter sales climbed 5.7 percent to $31.5 billion, the New York-based company said in a statement.
The average size of customers’ monthly bills grew 4.7 percent to $159.73.
Verizon’s net income rose to $4.21 billion, or $1.01 a share, up from $2.25 billion, or 78 cents, a year ago, before the company bought full control of its U.S. wireless business.
Verizon acquired Vodafone Group Plc’s 45 percent stake in the mobile-phone unit on Feb. 21 for $130 billion, the third-largest deal in history.