Verizon revenue beats as promotions help attract postpaid users

Pedestrians pass in front of a Verizon sign in New York City.
Scott Mlyn | CNBC

Verizon Communications reported better-than-expected quarterly revenue and profit as heavy promotions helped the company attract postpaid subscribers amid the launch of Apple's new iPhones.

The largest U.S. wireless service provider has been facing stiff competition from companies such as T-Mobile US and Sprint, who have been offering massive discounts on call and data plans.

Apple launched the iPhone 6S and 6S Plus in September, triggering heavy promotional activity in the telecoms industry towards the end of the third quarter.

Verizon shares rose about 2 percent in premarket trading on Tuesday.

A pedestrian talks on his cell phone while walking past the Verizon Communications Inc. headquarters in New York.
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The company net added 1.3 million wireless retail postpaid subscribers in the quarter compared with 1.1 million in the second quarter.

Drexel Hamilton analyst Barry Sine said the subscriber numbers were slightly better than expected.

However, Verizon's average revenue per account (ARPA) declined to $152.38 from $153.73.

As its ARPA comes under pressure, Verizon is entering new markets such as mobile video and "Internet of Things" — the concept of connecting everything from industrial machines to household devices to the Internet — to boost its earnings.

Revenue from its Internet of Things and related offerings rose to about $175 million from $165 million in the prior quarter.

Revenue from FiOS high-speed Internet, TV and phone service rose 7.5 percent from a year earlier to $3.4 billion.

The net income attributable to Verizon rose 9.3 percent to $4.04 billion, or 99 cents per share, in the quarter ended Sept. 30.

Excluding items, the company earned $1.04 per share, slightly higher than the average analyst estimate of $1.02, according to Thomson Reuters I/B/E/S.

Total operating revenue rose 5 percent to $33.16 billion, beating analysts' expectations of $32.94 billion.

Verizon shares were trading at $45.50 before the bell. Up to Monday's close, the stock had fallen about 4.5 percent this year.