By Samrhitha A
(Reuters) - Verizon (NYSE:VZ) raised its annual free cash flow forecast on Tuesday as its promotional offers and high-speed 5G network drew more subscribers than expected in the third quarter, sending the U.S. wireless carrier's shares up nearly 9%.
The company said it now expects annual free cash flow (FCF) to be higher than $18 billion, an increase of at least $1 billion from its prior forecast. Its third-quarter FCF also beat Visible Alpha estimates by more than $1.3 billion.
New York-based Verizon has benefited from price hikes, consumers' switch to higher-tiered unlimited plans and the success of its customizable myPlan which was launched in May.
The company, whose plans typically cost more than rivals AT&T (NYSE:T) and T-Mobile's offerings, added 100,000 net monthly-bill-paying wireless phone subscribers in the third quarter, compared with FactSet estimates of 63,600 additions.
"Verizon showed it can still drive customer growth in mobile wireless even in the face of aggressive promotional pricing from AT&T and T-Mobile," Third Bridge analyst Jamie Lumley said.
Still, Verizon said fewer Americans were upgrading phones, a trend analysts have blamed on the uncertain economic outlook.
"We continue to see muted upgrade levels and (it) is a trend we expect will continue for the next few quarters," Chief Executive Hans Vestberg said on a post-earnings call.
Customers have also been hanging on to their phones for longer as they are on 36-month payment plans due to which the company sees a longer refresh cycle, finance chief Tony Skiadas said.
Verizon's revenue, which fell 2.6% to $33.3 billion in the three months to September, was in-line with analysts' average estimate of $33.25 billion, according to LSEG data.
It was supported by a more than 15% rise in broadband net additions to 434,000, which included 384,000 fixed wireless net additions.
Adjusted profit came in at $1.22 per share, beating estimates of $1.18.
AT&T also raised its annual FCF forecast last week, while T-Mobile is scheduled to report results on Wednesday.