AT&T, Verizon Offer Wireless Service and Prices


In a tale of two phone service providers, AT&T's Q2 earnings and revenue recently missed Wall Street views, while Verizon Communications topped forecasts.

AT&T ( T ) on July 23 reported a profit of 62 cents a share excluding items, a decline of 7% from the same quarter a year earlier -- its first decline since Q4 2011. Revenue climbed nearly 2% to $32.6 billion for the fifth straight period of low single-digit growth.

In order to compete with rivals, the Dallas-based company has unbundled service and device charges and cut prices on its service plans. And as more customers choose to pay for their phones to get a lower-cost service plan, average revenue per user has fallen and equipment revenue has risen. AT&T expects two-thirds of customers to be on its unbundled plan by year's end.

The stock, up about 1% this year, is working on a flat base with a 36.96 buy point.

It's making up for the lackluster stock price performance with a quarterly dividend of 46 cents a share, or $1.84 for the full year, for a 5.1% annualized yield. That's more than double the S&P 500's 1.9%.

RivalVerizon Communications ( VZ ) also pays a sizable dividend: 53 cents, or $2.12 for the year, which works out to a 4.1% yield.

The New York-based telecom giant last week said it earned 91 cents a share ex items in Q2, up 25% from the prior year.

Revenue rose 6% to $31.5 billion, its best growth in the past six quarters, as the amount of wireless customers and tablet sales rose.

Unlike other service providers, Verizon hasn't been aggressively discounting or pushing unbundled wireless service plans.

It said 18% of wireless subscribers switched to the nonservice-contract plan.

Its wireless revenue increased 7.5%, thanks to service-revenue gains. Its average monthly revenue per account grew 4.7%.

The stock, which has been consolidating along its 10-week moving average, is up about 3% this year.

No clear entry has yet materialized.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Personal Finance , Investing Ideas

Referenced Stocks: T , VZ

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