Verizon is winning customers more cheaply, but revenue per account has not turned

Verizon added 406,000 postpaid phone customers in the September 2026 quarter while spending far less to attract and keep them: its promotional cost of acquiring customers fell 41% from a year earlier, and of retaining them 30%. That lifted its adjusted EBITDA margin, a measure of profit before interest, tax, depreciation and amortisation, to 40.2% from 37.8%, and the company raised its full-year guidance. What has not moved with it is the money each customer account brings in. Postpaid revenue per account was $168.08, 1.9% lower than a year earlier.

The savings come from selling fewer subsidised phones. Management said it now favours its Simplicity plans and loyalty programme over heavy handset discounts, and fewer customers traded up: the quarterly upgrade rate fell to 2.6% from 3.3%. Verizon sells handsets for less than they cost it, so every upgrade it does not pay for shrinks that loss. Selling and administrative costs also fell from a year earlier.

Less of the improvement reaches profit than the margin suggests. Adjusted EBITDA rose by about $1.0 billion, but depreciation and amortisation rose by $477 million and interest expense by $286 million, so income before tax grew by $290 million. Those increases are of the order Verizon described when it took over Frontier Communications, the fibre operator it has consolidated since January: about $1.5 billion a year of extra depreciation and $1 billion of extra interest. Because Frontier was not in last year's figures, every year-on-year comparison here includes an acquired business, so the margin gain cannot all be read as the existing business improving.

Earnings per share still grew faster than net income, because Verizon has been buying back its own stock and the average share count fell. A smaller share count raises each remaining share's slice of profit without the business earning more.

Revenue per account is the piece the cost savings cannot supply. In January, Verizon said it would avoid price increases that gave customers nothing extra, after earlier rises had pushed up churn. In July, management said the drag from the amortisation of past promotions had peaked and would ease through the second half. Last quarter's figure was still below the year before, and so was the average for the first nine months. The company's case is that legacy discounts are rolling off, and it credits them for part of the pick-up in service revenue growth; revenue per account has not shown the turn.

That is why a remark from the chief executive, Daniel Schulman, matters more than its hedged wording. Asked about pricing, he said Verizon had added value for customers over the past year and that "there's potentially room for us to adjust that price-to-value equation by increasing pricing as well." He framed it as something the company can begin to consider, without a date or an amount. A price rise is the most direct way to lift revenue per account, and it would also test the lower churn that Verizon credits to its new plans and customer service.

The cash figures have a similar shape. Free cash flow rose by $845 million from a year earlier, but most of that came from spending $594 million less on the network; cash from operations rose by $251 million. Full-year capital spending guidance was left unchanged, which implies more spending in the fourth quarter than in the third, calculated from the reported nine-month total.

So far, then, the raised outlook rests on more customers and lower costs: Verizon lifted its target for postpaid phone additions and its operating-cash forecast, while subsidies, upgrades and overheads fell, partly offset by the costs of what it bought. Revenue per account, which a price rise or the new fibre business would have to lift, has not yet joined in.