Morningstar

Verizon Earnings: Wireless Momentum Builds as SpaceX Maneuvering Continues

In our view, Verizon’s momentum with wireless customers is the strongest it’s been in a decade.

A Verizon logo illuminated outside booth.
David Ramos via Getty
Securities in This Article
Verizon Communications Inc
(VZ)

Key Morningstar Metrics for Verizon Communications

  • Fair Value Estimate
    : $54.00
  • Morningstar Rating
    : ★★★★
  • Morningstar Economic Moat Rating
    : Narrow
  • Morningstar Uncertainty Rating
    : High

What We Thought of Verizon Communications’ Earnings

Verizon Communications’ VZ revenue rose 1.5% in the third quarter, but it would have fallen about 3.0% without the Frontier acquisition. Lower phone sales drove most of the decline as the firm deemphasized upgrades and subsidies. Core wireless and broadband revenue increased about 0.4%, also adjusted for Frontier.

Why it matters: Results this quarter were solid. In our view, Verizon’s momentum with wireless customers is the strongest it’s been in a decade, and efficiency gains have driven impressive cash flow. However, the market remains heavily focused on SpaceX’s potential entry into the wireless business.

  • The pace of wireless customer defection, or churn, remains a weakness but showed modest improvement year over year. We expect churn will gradually improve as more customers move to new lower-cost rate plans, which have done a good job of attracting new wireless accounts.
  • Management again claimed it has no interest in signing a wholesale wireless network agreement with SpaceX, while defending its ability to compete if SpaceX chooses to build a network. Our base case is that SpaceX does not build a terrestrial network intended to serve the wireless market.

The bottom line: We maintain our $54 fair value estimate and Narrow Morningstar Economic Moat Rating.

  • We also reiterate our High Morningstar Uncertainty Rating, reflecting the possibility that SpaceX continues to assemble wireless assets, drives up spectrum prices, or, less likely, enters the traditional wireless business.
  • If SpaceX signs an agreement with a wireless tower company, the details will matter. As we’ve seen with Dish Network/EchoStar, tower agreements can run anywhere from a couple of years to more than a decade.

Key stats: Despite lower wireless pricing, free cash flow is up 14% thus far in 2026. Nearly all cash flow this year has been used to fund the dividend (49%), share repurchases (22%), and spectrum acquisitions (24%), leaving net debt elevated following the Frontier deal.

Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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