Stocks/Earnings

Verizon Blames Fios TV Losses on OTT Pressure, Competitive Promos

Telco sheds 18K video subs, adds 66K Fios internet customers in Q3 10/20/2017 10:52 AM Eastern

It was a mixed bag for Verizon Fios in Q3, as its pay TV business remained under siege even as the telco continued to tack on Fios internet customers.

Verizon lost 18,000 Fios TV subs in Q3, versus 36,000 additions in the year-ago quarter. Verizon, which has lost 46,000 Fios TV subs through the first three quarters of 2017, ended the period with 4.64 million subs in the category.

Fios video results “were pressured due to the ongoing shift from traditional linear video to over-the-top offerings, as well as competitive promotional activity,” Matthew Ellis, Verizon’s EVP and CFO, said Thursday on the company’s Q3 earnings call.

Verizon, which recently revamped its free, ad-based go90 streaming service, is looking to key in on the OTT trend with its own internet-delivered skinny TV package. That effort didn’t come up on the call, but Bloomberg reported this week that the product is delayed, and isn’t expected to launch until Q1 2017 or later.

RELATED: Verizon’s OTT TV Service Delayed to Spring 2018: Report

Ellis later reiterated Verizon’s view that “traditional linear TV bundle is not long-term sustainable and you saw our reaction to that when we launched some of the different plans that we launched at that point in time.

“We are not surprised by what we are seeing around the TV,” he added. “But I would tell you what is important, when you move to over-the-top for your video entertainment, the quality of that broadband connection becomes more important than ever and if you want a quality broadband connection Fios and fiber to the home connection is the best option out there.”

Verizon also added 66,000 Fios internet subs in Q3, down from 90,000 adds a year earlier, giving it a grand total of 5.8 million subs. With DSL losses of 76,000 factored in, Verizon lost 10,000 net high-speed internet customers in Q3, and a total of 6.97 million broadband connections.

Verizon also added 11,000 Fios digital voice subs in Q3, ending the period with 3.92 million.

With all categories tied in, Verizon ended Q3 with 14.37 million total Fios connections, up from 14.14 million a year earlier. Fios revenues grew 4.8%, to $2.94 million.

Verizon didn’t have much new to say about its 5G fixed wireless trials, with Ellis noting that they are “going very well” and that the plan remains to launch a fixed wireless broadband offering during the course of 2018.

RELATED: Verizon Exec: ‘Meaningful’ 5G Deployments to Start in 2018

However, Ellis did say that Verizon plans to elaborate further on that trial activity later during the current quarter.

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