Verizon's Subscriber Growth Masks Rising Churn and Financial Pressures

What happened

Verizon's consumer segment is showing strong postpaid phone subscriber additions, as highlighted in recent coverage. However, SEC filings reveal that postpaid phone churn increased to 0.92% in 2025 from 0.83% in 2024, indicating that growth may be driven by promotions rather than sustainable retention. The company faces significant debt from the Frontier acquisition and integration costs, which strains cash flow despite guidance for at least $21.5B in free cash flow for FY26. Competitive intensity from AT&T and T-Mobile is keeping wireless service revenue flat, even as Verizon targets 0.75–1.0M net adds this year. Investors must watch for churn improvement and buyback execution in upcoming quarters to confirm the quality of this momentum.

Implication

The apparent strength in Verizon's consumer segment is undermined by rising churn, which threatens long-term profitability if not reversed, as seen in 2025 data. High debt from the Frontier deal adds financial risk, limiting flexibility for capital returns like the planned $3B buybacks in FY26. Competitive pressures from AT&T and T-Mobile are suppressing pricing power, keeping revenue growth stagnant despite subscriber increases. Upcoming catalysts, including 1Q26 results and FCC inquiry outcomes, will be critical in validating the turnaround narrative and convergence benefits. Without clear evidence of churn improvement and disciplined cash flow generation, the stock's current valuation near $49 may not hold, aligning with the 'WAIT' rating from the DeepValue report.

Thesis delta

The new article emphasizes subscriber growth but does not change the core investment thesis, which remains focused on the need for churn improvement and financial discipline. Investors should still wait for 1Q26 and 2Q26 results to confirm whether growth is sustainable or promo-driven, as the DeepValue report outlines. No shift in the thesis is warranted until concrete evidence emerges from these upcoming milestones.