Verizon accelerates third-quarter subscriber growth and raises guidance, with AI connectivity orders creating a new growth opportunity

Why did subscriber growth improve, and at what cost?

In the third quarter of 2026, Verizon added a net 406 thousand postpaid phone subscribers, an increase of more than 820% year over year and its strongest third-quarter performance in five years. It added a net 137 thousand postpaid accounts, its best quarterly result in more than a decade.
Management attributed the improvement to customer-facing initiatives such as Simplicity, launched in June, rather than steep promotions. Simplicity plans offer little or no device subsidy; promotional acquisition costs fell 41% year over year during the quarter, and retention costs fell 30%.
Postpaid phone churn was 0.94%, down 4 basis points year over year. However, customers kept their old devices longer, and the company controlled subsidies; device upgrades fell more than 20% year over year, while device revenue fell 9%.

Third-quarter mobile and broadband service revenue was 23.5 billion dollars, up 2.9% year over year, a faster rate than 1.6% in the first quarter and 2.8% in the second. Management said a larger subscriber base and a reduced drag from promotional expense amortization drove growth, and expects wireless service revenue to return to year-over-year growth in the fourth quarter.
Average revenue per account continued to decline year over year, mainly due to dilution from the Frontier transaction in the first quarter; its sequential trend improved, however, and management expects it to continue growing in the fourth quarter.
The company raised its 2026 postpaid phone net additions guidance to 1.1 million–1.2 million, from a previous expectation for the upper half of the 750 thousand–1 million range. It raised its adjusted earnings per share growth guidance from 6%–7% to 7%–7.5%.
Full-year free cash flow growth guidance was raised from 9%–10% to nearly 12%; third-quarter free cash flow had already risen more than 12% year over year. Full-year capital expenditure guidance remained at 16 billion–16.5 billion dollars, including investments related to AI Connect that occur as the business succeeds.

Broadband net additions in the third quarter were 314 thousand, including 155 thousand fiber and 159 thousand fixed wireless access (FWA) additions. FWA growth slowed again; management said the shift toward fiber reflected the Frontier integration and a focus on increasing customer lifetime value.
The company plans to use millimeter-wave spectrum to provide gigabit-class FWA, and expects it could eventually cover an additional 10 million–15 million premises beyond its target of 40 million–50 million fiber-covered households. Bernstein believes this could strengthen competition against cable broadband and satellite services, but millimeter wave has historically faced constraints including limited new coverage and existing wiring in some multi-dwelling buildings, so it has not yet included much incremental benefit in its model.

Verizon has signed approximately 4 billion dollars in AI Connect contracts, including an AWS agreement worth more than 2 billion dollars. Bernstein believes hyperscale cloud providers need fiber to connect data centers, and Verizon can serve that demand on the basis of its existing enterprise connectivity business; management expects these opportunities to begin making a meaningful contribution to growth in 2027.
Bernstein raised its adjusted earnings per share forecasts for 2026 and 2027 from 5.00 dollars and 5.20 dollars to 5.03 dollars and 5.24 dollars, respectively, but maintained its Market Perform rating and 45 dollar price target. The firm believes the earnings threat from Starlink is not imminent, but SpaceX’s actions make its wireless ambitions harder to ignore, and the resulting uncertainty could weigh on the share price.