Verizon’s fourth quarter of 2020 was a mixed bag, with the company reporting 279,000 net phone additions, lower than most analysts had expected.  

The company ended the year with more than 2% growth in wireless service revenue –  “a very strong year that put us in a good position” going into 2021, said CEO Hans Vestberg during the company’s earnings conference call on Tuesday. Granted, it was a very different year with the Covid pandemic, but Verizon still hit its strategic milestones, he said.  

Verizon now boasts 64 cities with its Ultra Wideband 5G service and 10 cities with the Home 5G internet service, as well as 10 Mobile Edge Compute (MEC) centers that it built with Amazon Web Services (AWS). “All in all, we deployed more than five times more Ultra Wideband sites during 2020, and we launched the Nationwide 5G” that now covers 230 million people, he said.

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The company remains upbeat for 2021. Despite the pandemic lowering the amount of roaming revenue it can bring in, in addition to slower foot traffic in stores, the company expects wireless service revenue growth of 3%. Cap ex is projected in the range of $17.5 billion to $18.5 billion.

RELATED: Verizon adds 283K postpaid phone subs in Q3, equipment revenue drops

When it comes to 5G, “we have a big year in front of us,” he said. Verizon is going to almost double the amount of 5G Ultra Wideband sites, with 14,000 new sites coming in 2021, and it expects to add more than 20 cities for Ultra Wideband. At the same time, it will be focusing on the 5G MEC, with 10 sites being launched for the public offering while scaling the network for the private side.

The 5G version of the iPhone, introduced in October, was an important event because a large base of Verizon customers are iPhone users. Vestberg acknowledged there’s a smaller switching pool because of the pandemic, but he also said he believes 5G is taking off faster than 4G did about 10 years ago.

RELATED: Verizon launches DSS, takes center stage during 5G iPhone launch

Verizon’s postpaid phone net adds of 279,000 were lower than Wall Street analysts had expected, with the consensus being 561,000. During the fourth quarter of 2019, Verizon reported 790,000 net postpaid phone additions.  

T-Mobile earlier this month released preliminary results and said it added 824,000 postpaid phone net additions in the fourth quarter. AT&T reports its fourth quarter results on Wednesday.

“Verizon’s quarterly results must be seen in the context of a larger-than-normal (but clearly not a ‘supercycle’) iPhone release. ‘iPhone quarters’ typically mean exaggerated activity levels – higher churn, higher upgrade rates, and lower margins. Higher churn favors share gainers (TMobile) at the expense of share losers (AT&T and Verizon),” wrote MoffettNathanson analyst Craig Moffett in a note for investors. “AT&T attempted to lock in its base with an exceedingly generous (and expensive) retention offer. Verizon did not.”

He noted that Verizon’s net subscriber gains were weak. “But not because of higher losses (churn), but instead because of weaker gains (gross additions). This has a number of impacts; Verizon actually saw lower equipment revenues this Q4 than last. That’s good for margins,” Moffett added.

The C-band auction, which shattered all expectations with a record $81 billion haul, is just entering the next phase and while the winners are not yet known, Verizon may have spent as much as $40 billion in the auction. Analysts at New Street Research said they expect Verizon will be in an “uncomfortable position” for the next 24 months at least, “with a network that is inferior to T-Mobile’s and pricing that is 20% above.”

Verizon will have to work hard to hang onto its subscriber share and premium brand position while navigating the next couple years, wrote New Street’s Jonathan Chaplin. He and his colleagues expect T-Mobile to become more aggressive in rolling out its 2.5 GHz spectrum and cable to continue taking share in wireless. That said, “Verizon’s management team has so far done a phenomenal job with a difficult hand, and their likely massive investment in C-band could help stave off a devastating loss of share.”

Here are a few more details from Verizon’s earnings report:

  • Verizon lost 50,000 prepaid subscribers after two quarters of gains in that department, but it continues to boast a base of high-end subscribers on the postpaid side. At the end of the fourth quarter, over 60% of its customer base was on an Unlimited plan, with more than 20% on a Premium Unlimited plan.  
  • Consolidated operating revenue for the fourth quarter was $34.7 billion, down 0.2%. Total wireless service revenue growth and results in the Verizon media group were offset by lower wireless equipment revenue and ongoing declines in legacy wireline products.
  • Disconnects related to customers in its Stay Connected program totaled more than 135,000 phones in the quarter. More than 50% of the customers in that program are staying current with their payments.
  • The acquisition of Tracfone remains pending and Verizon expects that to close in the second half of the year. However, its guidance for the year does not assume any significant impact from that, according to CFO Matt Ellis.

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