Editor’s note: Steve Vachon is an analyst with Technology Business Research. His review focuses on Verizon’s latest financial report which was issued Tuesday.

HAMPTON, N.H. – Verizon’s consolidated revenue rose 6.6% year-to-year due to growth within the carrier’s Oath, wireless and Internet of Things businesses.

Oath from Verizon

Oath revenue rose 166.7% to $1.9 billion, buoyed by the Yahoo acquisition, as Oath is attracting advertisers through its programmatic capabilities and data analytics tools. Revenue will continue to grow in 2018 as Verizon leverages content including NBA and NFL programming to bolster ad traffic on multiple Oath platforms, including Yahoo, AOL and go90.

Verizon is focused on leveraging its Oath assets to maximize ad traffic and revenue from customers of all wireless carriers, rather than bundling in free subscriptions to streaming services such as HBO Now or Hulu to attract new wireless customers, as its competitors are doing.

Though this strategy is helping to boost Oath revenue, refraining from mobile video bundles is hindering Verizon’s wireless subscriber growth as the company lost 24,000 postpaid phone customers as consumers are being incited by rival offers such as T-Mobile’s Netflix on Us and AT&T’s DirecTV Now bundles.

Wireless revenue is improving, however, thanks to higher equipment revenue (33.9% YTY) driven by adoption of premium devices, and service revenue is beginning to stabilize as 81% of postpaid phone customers are now on unsubsidized device plans.

Verizon’s wireline revenue (-1.6% YTY) remains challenged as the company lost 22,000 video customers in 1Q18, and these trends will persist throughout 2018 as more OTT platforms launch, possibly including new offerings stemming from AT&T’s proposed Time Warner acquisition.

To help offset continuing Fios video subscriber losses from cord cutters, Verizon is focused on upselling customers to faster internet tiers to enhance the streaming quality of OTT video services and has begun bundling in free Netflix subscriptions to attract customers to its Fios Triple Play offering.

Verizon’s upcoming 5G fixed wireless services also provide opportunity to bundle new IP-based video offerings in markets outside the company’s current Fios footprint.

Verizon integrates NFV and SDN for greater cost savings and portfolio enhancement

Efficiencies gained by Verizon’s adoption of virtualized network technologies, such as NFV and SDN, will be a main driver of the carrier’s goal of cutting $10 billion in operating costs by 2020. Verizon is also monetizing NFV and SDN technologies through its expanding Virtual Network Services portfolio.

According to TBR’s 1Q18 NFV/SDN Telecom Market Landscape, operators are recognizing that collaborating with the broader telecom industry is essential to resolving interoperability hurdles that have been slowing NFV and SDN adoption. For example, Verizon, which was the most notable holdout from the Open Network Automation Platform, joined the group in January 2018 and is encouraging deeper interoperability among telecom vendors to foster greater automation and scalability for solutions deployed across the industry.

Offering software-mediated network services is becoming a necessity for operators to maintain market share among businesses as most global Tier 1 service providers have commercially launched SD-WAN and other virtualized network solutions. As competition intensifies within the space, Verizon is focused on differentiating its Virtual Network Services portfolio by making it easier to purchase and combine multiple virtual network functions through recently launched platforms including Virtual Network Services-One and Virtual Network Services Solution Bundles.

(C) TBR