Verizon (VZ) shares rose as the wireless giant topped first-quarter 2018 earnings forecasts on Tuesday morning, amid reports the Department of Justice is investigating whether the company and other telecoms are developing technology standards that would allow them to lock some devices.
Shares gained 3.4% to $50.32 before the market open on Tuesday. Verizon is the first of the U.S. wireless carriers to report first quarter earnings. AT&T (T) reports Wednesday.
Updated from 8:27 a.m. with additional information.
Verizon earned $1.17 per share on a non-Gaap basis, beating expectations of $1.11 per share according to FactSet. Revenues of $31.8 billion were ahead of forecasts of $31.2 billion.
The telecom recorded 260,000 postpaid net additions of mobile devices overall. Of those, Verizon had a net gain of 220,000 postpaid smartphones, but total net phone accounts dropped 24,000.
Churn, or the rate of customer defections, was 1.04% among all postpaid accounts. Among postpaid phone accounts, churn was 0.8%. Jennifer Fritzsche of Wells Fargo Securities LLC wrote in a Tuesday report that "we believe VZ will have lowest phone churn of any carrier in Q1 (while also being the only one not to have a bundled video offering)," Fritzsche.
Wireless service revenues dropped 2.4% in the quarter. While wireless services revenues have lagged, they are showing signs of improvement. Excluding a new standard for recognizing sales, wireless service revenues were in line with the first quarter last year and overall were positive in March. Fritzsche called the shift "an important inflection point."
Verizon expects a net gain of $3.5 billion to $4 billion from tax cuts in 2018.
Earnings for the Oath digital media properties, which include Yahoo! and AOL, fell 13% from the fourth quarter of 2017 to $1.9 billion.
Verizon's Internet of things revenue were up 13%.