Telecommunication behemoth Verizon Communications (VZ) - Get Report  may have beaten third-quarter earnings estimates, but a lot of pain lies beneath the operating results.

The company reported earnings Friday of $1.01 a share, which beat analysts' estimates by 2 cents, but revenue fell 6.7% to $30.94 billion. The company added a net 442,000 postpaid subscribers, versus the 766,000 expected.

Verizon Communications lost 36,000 monthly phone customers in the third quarter, down from growth of 430,000 a year earlier. Also, the carrier added 36,000 FiOS TV subscribers, less than the 42,000 a year earlier and analysts' prediction of 59,000.

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Analysts expect that revenue will continue to drop in the fourth quarter.

Even ignoring the cloud over the $4.8 billion deal to buy beleaguered Yahoo!, Verizon Communications'principal cash cow segment -- the telecom business -- is under stiff pressure.

Verizon Communications has suggested that the Samsung Electronics Note 7debacle and a backlog in orders for Apple's new iPhone 7 are behind the sluggishness.

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The truth is that Verizon Communications has always charged a premium for its service, given that its network coverage is available in areas where rivals are virtually non-existent.

Yet, smaller competitors such as Sprint and T-Mobile US have successfully rolled out aggressive promotions such as unlimited data to win over Verizon Communications' subscriber base, especially family accounts.

There was also postpaid churn, a good indicator of the health of a company's subscriber base.

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Verizon Communications saw 1.04% of subscribers cease to use the company's services in the third quarter. Statistically, this is the first time that the postpaid churn rate is above 1% levels in the past six quarters.

The Yahoo! deal, meanwhile, is a quagmire that is unlikely to get better.

The massive data breach that occurred two years ago but was revealed only recently, may help Verizon Communications get Yahoo! for a price that is a billion dollars cheaper. But the value of the deal then would be a matter of concern.

In a maturing and competitive wireless market, Verizon Communications with Yahoo! could compete with Internet giants such as Alphabet's Google and Facebook.

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However, the 500-million email account data breach makes Yahoo! looks unsafe. In addition, even if Verizon Communications goes through with the deal, it will take years to find out if the advertising strategy truly pans out.

The only immediate trigger for the stock could be the potential sale of its data centers to possibly Equinix, though the $3.5 billion price tag is known and possibly discounted for, in Verizon Communications' stock price.

The stock's 11%-plus decline in the past three months is only a glimpse of the decline that may be in the cards.

Investors could probably buy the stock a lot cheaper soon. There isn't a lot of value in Verizon Communications right now, apart from its dividends.


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The author is an independent contributor who at the time of publication owned none of the stocks mentioned.